Page 40 - Cost Accounting - Ready Reckoner
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4. Flexible Budget:
A budget of expenditure at various operating capacities or levels is called as flexible
budget.
Expenses are classified into fixed, variable and semi variable.
Fixed Cost:
It remains constant at all volumes of production. Eg. Rent.
Variable Cost:
It varies with volume of production variable cost remains constant on per unit
basis. Eg. Raw materials.
Semi Variable Cost:
It is partly fixed and partly variable. Eg. Fuel and power.
Thus total cost is arrived by adding fixed, variable and semi variable expenses for
various levels of activities/operations.
A master budget is a summary of budgets of all departments in an organisation.
