ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A flexible budget is a budget that changes as per the activity level or production of units. The fixed budget is static and doesn’t change at all. On the other hand, a flexible budget is adjustable as per the necessity of the business. A fixed budget is always fixed.

Detailed explanation-2: -Corporate Finance For example, a seasonal business might create a flexible budget that anticipates changing staff levels as customers come and go over the course of the year. Or a company that conducts product development might allow for greater research investment in case of strong sales.

Detailed explanation-3: -Advantages of Incremental Budgeting Incremental budgeting is the easiest budgeting approach. Since it uses the budget for the current period to project the future budget, it does not require complex calculations. Also, only a few assumptions are required in the budgeting method.

Detailed explanation-4: -Incremental budgeting. Incremental budgeting is the traditional budgeting method whereby the budget is prepared by taking the current period’s budget or actual performance as a base, with incremental amounts then being added for the new budget period.