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To prepare the flexible budget the units will change to 17 500 trucks and the actual sales level and the selling price will remain the same. How to prepare.

How To Make A Startup Budget For Your New Business Small

It is designed to show the expected revenue and the allowed expenditure for the actual number of units produced and sold.

How to prepare a flexible budget. The need for a flexible budget arises from the fact that some expenses are fixed in nature irrespective of the levels of activity some are variable which change with the levels of activity and some expenses are partly variable and partly fixed in nature which do not vary directly with the levels of activity. Determine the extent to which all variable costs change as activity measures change. Comparing this flexible budget with the actual expenditure and revenue it is possible to distinguish genuine efficiencies.

Kira s accountant steve prepared the overhead budget shown. The variance that exists now is simply due to price. Consider kira president of the fictional skate company which manufactures roller skates.

The 262 500 is 17 500 trucks times 15 per truck. The first step in preparing a flexible budget is to examine your recent spending habits. Identify all fixed costs and segregate them in the budget model.

A flexible budget can help managers to make more valid comparisons. To prepare a flexible budget you need to have a master budget really understand cost behavior and know the actual volume of goods produced and sold. Gather your financial records from last year primarily your bank and credit card statements.

Create the budget model where fixed costs are hard coded into the model and variable costs. The steps needed to construct a flexible budget are. Bring your checkbook and paypal statements to the table if you use those payment methods for more detail.