[Troutman85]

Hey everyone. I’m hoping for some help with Flex Budgeting. The concept seems to be eluding me and I can’t get a grasp on it. I’m having trouble with variances in general, but the PURE DADS mnemonic is helping and its starting to sink in. With flex budgeting though there seems to be no formula to memorize and I’m not sure what the objective of flex budgeting is. Are we comparing budget to actual? I would be very grateful for some insight on this.

Thanks!

[Amay]

The way I understand it is that flexible budgeting takes into account actual level of activity…Now I'm kind of hoping I don't get a WC on this.

BEC: 73, 81
AUD: 85
FAR: 71, 77
REG: 74, 75...finally DONE! 😀

*This is my 2nd attempt at the CPA exam. For all of you who have failed this exam many times, given up on it, or taken a break like me, remember that it is still possible to finish what you started...failure is the opportunity to begin again more intelligently 🙂

[Amay]

The way I understand it is that flexible budgeting takes into account actual level of activity…Now I'm kind of hoping I don't get a WC on this.

BEC: 73, 81
AUD: 85
FAR: 71, 77
REG: 74, 75...finally DONE! 😀

*This is my 2nd attempt at the CPA exam. For all of you who have failed this exam many times, given up on it, or taken a break like me, remember that it is still possible to finish what you started...failure is the opportunity to begin again more intelligently 🙂

[Anonymous]

They way I think of flexible budgets are that it adapts to changes in variable costs that result from changes in sales levels.

Y = A + b(x)

Y = total cost (Dependent)

A = fixed costs (Constant)

b = variable costs (Variable)

x = cost driver (quantity, sales, etc….) (Independent)

For example, if the Company thought next month they will sell 10,000 quantity, they would use the flexible budget to determine projected costs. It's a method for them to forecast/budget…..

[Anonymous]

They way I think of flexible budgets are that it adapts to changes in variable costs that result from changes in sales levels.

Y = A + b(x)

Y = total cost (Dependent)

A = fixed costs (Constant)

b = variable costs (Variable)

x = cost driver (quantity, sales, etc….) (Independent)

For example, if the Company thought next month they will sell 10,000 quantity, they would use the flexible budget to determine projected costs. It's a method for them to forecast/budget…..

[Whopper Warrior]

a flex budget trys to compare apples to apples.

if becker said they were going to sell 10,000 review courses and only sold 6,000 there would clearly be a difference in income. However, fixed costs do not change.

budget sales x budget price

(budget sales x budget cost)

contribution margin

(budget fixed cost)

gross profit

compared to

actual sales x budget price

(actual sales x budget cost)

contribution margin

(budget fixed cost)

gross profit

a flex budget is the new benchmark for variance analysees (plural of analysis, im an accountant, not a writer)

ALL 4 parts passed summer 13
Ethics October 13
Experience (waiting)

Becker Only

[Whopper Warrior]

a flex budget trys to compare apples to apples.

if becker said they were going to sell 10,000 review courses and only sold 6,000 there would clearly be a difference in income. However, fixed costs do not change.

budget sales x budget price

(budget sales x budget cost)

contribution margin

(budget fixed cost)

gross profit

compared to

actual sales x budget price

(actual sales x budget cost)

contribution margin

(budget fixed cost)

gross profit

a flex budget is the new benchmark for variance analysees (plural of analysis, im an accountant, not a writer)

ALL 4 parts passed summer 13
Ethics October 13
Experience (waiting)

Becker Only

[Anonymous]

How did you manage to pass all 4 parts of the CPA exam in 1 window Whopper Warrior

Static Budget Budget price X budgeted Sales

Flexible Budget Budgeted Price X Actual sales

Flexible budget must be made at the end of the period when sales are known as oppose to a master or static budget which is made at the beginning

[Anonymous]

How did you manage to pass all 4 parts of the CPA exam in 1 window Whopper Warrior

Static Budget Budget price X budgeted Sales

Flexible Budget Budgeted Price X Actual sales

Flexible budget must be made at the end of the period when sales are known as oppose to a master or static budget which is made at the beginning

[Troutman85]

Thanks for the replies everyone!

[Troutman85]

Thanks for the replies everyone!

[Author]

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