Compare and contrast the fixed and flexible budgets Assignment

Compare and contrast the laid and flexible computes - Assignment modelingHowever, in unstable dividing line scenario, flexible cipher is always more relevant as it helps the business to effectively manage possible motleys in the business environment, which would be hazardous if not well managed. Therefore, budget managers are usually faced with the task of adopting the right type of budget for their organisations depending on business situation. This publisher explores fixed and flexible budgets, their differences, preparation procedures and functions.A fixed budget (static budget), is a type of budget that corpse unchanged over the budget period regardless of changes in the level of activity of the organisation. A fixed budget is prepared of for one level of activity for a definite time period (Dutta 2004 p. 25). On the contrary, a flexible budget is a budget which is designed to change with changes in activity level. It is as well referred to as variable budget because it t akes into account cost behavior, such as fixed and variable costs, in connection with changes in output level or turnover (Weygandt, Kieso & Kimmel 2010).A fixed budget stay constant relative to the variation in the actual level of activity attained. This makes it inflexible. On the other hand, a flexible budget changes with the variation in the level of actual activity, which makes it flexible (Tulsian & Tulsian 2005).A fixed budget is developed base on one level of activity and relies on the assumption that no change will occur in the prevailing circumstances, which is impractical. On the other hand, a flexible budget is based on various levels of activity (Weygandt, Kieso & Kimmel 2010).In a fixed budget, all costs are link to a single level of activity. As such, variance analysis fails to provide valuable information to the highest degree cost differences. On contrary, flexible budget analyses each cost on the ground of cost behaviour and thus gives important information ab out cost variances (Tulsian & Tulsian 2005).Under fixed budgets, the comparison of