Page 9 - Budgeting

Static vs. Flexible

Static budgets Flexible budgets

 Do not vary with volume.  Adjust for changes in volume.

 Volume changes may create  Evaluate performance after

budget variances. adjusting for volume effects.

 Since managers are not insulated  Manager is not held responsible for
from volume changes, they will try volume changes.

to mitigate the impact of adverse

volume changes.