Cash Management - Flexed Budget

SammyRPA Registered Posts: 26 Dedicated contributor ? ? ?
I'm new to this and really hoping that someone can help me pretty please?? :blushing:
My mind has just gone completely blank when it comes to flexed budget variances, I've gone through notes, practise exams, everything and..nothing :crying:
I feel really silly asking as i know its so simple and i will do nothing but kick myself when told but I just need if possible someone just to run through the process for me?
I've got my exam in two weeks and feeling ok about the rest just starting to panic now about this bit

Thanks in advance, Sammy :001_smile:


  • Nps
    Nps Registered Posts: 782
    Which bits exactly are you struggling with?

    The basic principle is.......

    1) Take your flexed budget
    2) Divide all your variable costs by the number of units your flexed budget was for. This will give you the variable cost for 1 unit.
    3) Multiply this by however many units are in the actual costs.
    4) Compare your new flexed budget to the actual costs as both will now be for the same number of units

    Of course, you will also have fixed costs in there. These will stay the same no matter how many units you have in your flexed budget.

    You may also have a semi-variable costs and stepped costs in there. How you deal with these will depend on the info in the question.

    Is there a question you can work through and we can jump in if you get stuck?
  • Nps
    Nps Registered Posts: 782
    Sorry, I've just seen that its the variances you are struggling with.

    So, following on from what I've written above.....

    Work out the difference for each cost between the actual costs and the new flexed budget. Then just ask yourself, are the actual results better or worse than the flexed ones.
  • SammyRPA
    SammyRPA Registered Posts: 26 Dedicated contributor ? ? ?
    Yes!!! Thank you, thank you, thank you!!
    I am starting to kick now haha!
    I will go through it on a practise exam on AAT and get back to you if still not 100%
    Sammy :)
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