All 34 Flexible Budgets questions
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What is the difference between fixed, variable, and semi-variable costs in flexible budgeting? What is the high-low method for splitting semi-variable costs? How does the flexible budget separate the volume variance from other variances? How are flexible budgets used for control reporting? What is the sales-volume variance in the context of flexible budgets? What is the difference between a static budget variance and a flexible budget variance? What are the limitations of flexible budgeting? How does flexible budgeting interact with absorption vs marginal costing? How can a flexible budget aid decision-making beyond control? How does flexible budgeting handle a budget prepared as a percentage of capacity?
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Budgeting & Forecasting › Flexible Budgets

What is the flexible budget variance?

Intermediate

Answer

The flexible budget variance is the difference between actual results and the flexible budget (flexed to actual activity). It captures price/rate and efficiency differences—the controllable performance—separate from the sales-volume variance, which is the difference between the flexible and the static budget.
Actual cost 82k vs flexed budget 80k = 2k adverse flexible budget variance.
Real-world example The flexible-budget variance shows how spending differed from what was allowed at the actual volume.

Common follow-ups: What does it exclude? | How does it relate to the sales volume variance?

Variance Analysis Types of Budgets Flexible Budgets
All 34 Flexible Budgets questions