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Budgeting

The flexed budget (budget cost allowance) is calculated as follows:

Fixed costs: no change

Variable costs:
Budgeted cost
Budgeted cost allowance = ————————— × Actual activity level
Budgeted activity level
Semi-variable costs: The fixed element will not change and the variable element
will be flexed as above.

Illustrations and further practice

Now try TYU question 6 from Chapter 13

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