ECONOMICS

Detailed explanation-1: -Flexible budget= Fixed cost + (actual unit of activity x variable cost per unit of activity).

Detailed explanation-2: -To calculate a flexible budget, first multiply the variable cost by the actual units produced. For example, if you produced 100 units at a unit cost of $5, the budget might be $5, 000. A flexible budget accounts for a larger number of units produced, so you might expect to sell up to 150 units.

Detailed explanation-3: -A formula used in developing flexible budget is: Total budgeted cost = fixed cost + (total variable cost per unit x activity level). 1. More costs become controllable as one moves down to each lower level of managerial responsibility.

Detailed explanation-4: -In a flexible budget, those expenses that do not change within a sales range appear primarily as fixed costs. One example is maintenance and cleaning. The costs that change significantly based on sales appear primarily as variable costs and show as percentages of sales.