Answer to Question #155894 in Management for Prabhdeep

Question

Differentiate between flexible budgeting and activity based budgeting? which is more relevant in today's environment?discuss ?(please give at least 10 points of difference)

Answer 1

A flexible budget is a detailed plan for controlling overhead and other costs while an activity-based budgeting is a system that records, researches, and analyze activities that lead to costs for a company.

Flexible budget changes as per the activity level of production while the activity-based budgeting do not.

Flexible budget is adjustable as per the necessity of the business while activity-based is not.

Flexible budget is semi-variable while activity-based is fixed.

Flexible budget is pretty complicated while activity-based is very simplistic.

Flexible budget takes alot of time to prepare whole activity-based budget takes little time.

Activity-based budget is estimated on past data while flexible budget is not.

Flexible budget is suitable for organizations while activity-based budget is suitable for only micro-organizations.

Flexible budget is quite flexible while activity-based budget is rigid.

Flexible budget is prepared with realistic situations while fixed budget is mostly estimated on assumptions and anticipations.

b) flexible budget is more relevant in today's environment.

c) it is flexible and hence adaptable to tremendous changes in today's environment