Flexed budget

MunaBx

Can't seem to recall how to do the flexed budget question. Level 3 Practice Assessment 1 Question 2.4
Would reeeeeeeeeeeeally appreciate any help :crying:

Nps

Which bit in particular are you stuck with? Have you managed to fill in any of the blanks so far?

Nps

First thing you need to do is flex your original budget to show the budget for 144,000 sales. So go down the list, calculate the value for 1 item (so dividing by 100,000) and then calculate the value for 144,000 items.

Remember to flex all the variable costs but keep the fixed costs as they are in the original budget.

You then need to compare the figures on this new flexed budget with the actual costs and note down the variances in each line. Then just think to yourself, were the actual results better or worse than the budgeted ones, to decide whether each variance is Adverse or Favourable. Just remember that for some things, a lower cost is better (ie. labour costs) but sometimes a higher value is better (ie sales volume) so you need to look at what the figures represent in order to decide if they are adverse or favourable.

MunaBx

Thank you so much! Seems so simple now :001_smile:

Nps

My pleasure :001_smile:

croadyman

Hi NPS, I am struggling with this too, so what do I need to Divide by £100,000 to get one item. I am a little confused by the above information

tylermarin

croadyman said:

Hi NPS, I am struggling with this too, so what do I need to Divide by £100,000 to get one item. I am a little confused by the above information

that 100,000 was an example of budgeted sales, so whatever the original budgeted sale is, is what you divide it by.

For example, there is a budgeted amount of sales totaling 50,000, and the actual was 70,000 you would divide the variable costs by 50,000 and times them by 70,000. I hope that makes some more sense?

i think thats how it works

croadyman

Yeah it finally clicked how to do it after looking at it for ages