What is a flexible budget?
A flexible budget is a budget that adjusts for changes in the level of activity or output. Unlike a static budget, which is based on a fixed level of activity or output, a flexible budget is designed to be adaptable to changes in sales volume, production volume, or other measures of business activity.
A flexible budget is typically created by identifying the various costs and expenses that vary with changes in activity levels and calculating the expected cost or expense for each level of activity. For example, if a business sells widgets and the cost of producing each widget decreases as more are produced due to economies of scale, the flexible budget would reflect this by showing a lower cost per widget as production increases.
The benefit of a flexible budget is that it provides a more accurate picture of a business’s performance by adjusting for changes in activity levels. This can help businesses make better decisions about their operations, identify areas where they can improve efficiency or reduce costs, and better plan for future growth.
Differences between Flexible Budget and Static Budget
The main difference between a flexible budget and a static budget is that a flexible budget adjusts to changes in activity levels, while a static budget remains fixed regardless of changes in activity levels.
A static budget is typically based on a fixed level of activity or output and does not change with changes in sales volume, production volume, or other measures of business activity. It is often created at the beginning of the budget period and is not adjusted as the period progresses. A static budget is useful for providing a baseline for planning and evaluating performance, but it may not be as accurate as a flexible budget.
On the other hand, a flexible budget is designed to adjust to changes in activity levels. It takes into account how changes in activity levels affect costs and expenses, and provides a more accurate picture of a business’s performance. A flexible budget is typically created using a range of activity levels and estimates of the associated costs and expenses at each level. It can be adjusted as actual activity levels become known during the budget period.
Steps in Creating a Flexible Budget
- Identify the key drivers of your business- Determine what factors are driving your business, such as sales volume, production volume, or number of customers.
- Determine the activity levels- Decide on the range of activity levels that your business is likely to experience during the budget period, such as low, medium, and high levels of sales or production.
- Estimate costs for each activity level- Calculate the expected costs for each activity level by breaking down your costs into fixed costs and variable costs. Fixed costs, such as rent or salaries, will remain the same regardless of activity level, while variable costs, such as raw materials or labor costs, will change with activity level.
- Create a flexible budget spreadsheet- Organize the costs by activity level in a spreadsheet or budgeting software. Use formulas or functions to automatically calculate the expected costs for each activity level.
- Compare the flexible budget to actual results- Once the budget period begins, track your actual results and compare them to the flexible budget. This will allow you to see where your actual results differ from your expectations and identify any areas where you need to adjust your operations.
- Revise the flexible budget as needed- If you find that your actual results are significantly different from your flexible budget, revise the budget to reflect the new information. This will allow you to make more accurate forecasts for future periods.
The 3 Levels of Flexible Budget
1) Basic Flexible Budget
This is the simplest form of a flexible budget, and it alters those expenses that vary directly with revenues. For example, finance can build a percentage into the basic flexible model, which they multiply by actual revenues to determine the expenses at a specified revenue level. It doesn’t provide the full level detail that a flexible budget would, but it does provide flexibility and a more accurate, up-to-date budget than a static budget.
2) Intermediate flexible budget
A flexible intermediate budget takes into account expenses that go beyond a company’s revenue. Revenue is constantly changing and is the most important factor in business decisions, but the intermediate flexible budget includes costs that vary based on other activity measures such as salaries and benefits based on the number of employees in the company.
3) Advanced Flexible Budget
A flexible budget adjusts for changes in activity levels for all costs, including both fixed and variable costs. This type of flexible budget takes into account how changes in activity levels affect all costs and provides the most accurate picture of expected costs at different levels of activity.
Example of a Flexible Budget
Let’s say a restaurant has a fixed budget of $10,000 for food expenses for the month, which is based on an expected number of customers served. However, the restaurant experiences a significant increase in customer traffic during a particular week, resulting in higher food costs.
To account for this increase, the restaurant creates a flexible budget based on the actual number of customers served. Here’s how the flexible budget might look:
- Food Expenses: $1.50 per customer x 3,000 customers = $4,500
- Labor Expenses: $3,000
- Rent and Utilities: $2,000
- Marketing and Advertising: $1,000
- Other Expenses: $1,000
Total Flexible Budget: $11,500
As you can see, the flexible budget adjusts the expected food expenses based on a higher cost per customer, resulting in an extra $1,500 in the overall budget. This allows the restaurant to better manage its expenses and make informed decisions about future pricing and menu offerings, potentially leading to a better allocation of resources and seizing the opportunity of the increase in customers to make a higher profit.
Advantages of a Flexible Budget:
- Accuracy- A flexible budget can provide a more accurate picture of a company’s expenses since it adjusts for changes in activity levels.
- Flexibility- A flexible budget can adapt to changes in the business environment, such as changes in sales volumes or unexpected expenses, making it easier to manage operations and make informed decisions.
- Motivation- A flexible budget can motivate employees since it allows for adjustments in spending to achieve their goals.
- Better Decision-making- A flexible budget allows for more informed decision-making, especially in situations where there are significant changes in the business environment.
Disadvantages of a Flexible Budget:
- Complexity- A flexible budget can be more complex to create than a fixed budget, requiring more time and resources to prepare.
- Difficulty in Comparison- A flexible budget can be more difficult to compare with actual results since it involves a range of activity levels and expected expenses.
- Higher Costs- A flexible budget can be more costly to implement, especially if it requires additional resources or software to track expenses accurately.
- Time-consuming- A flexible budget can be more time-consuming to manage, requiring ongoing updates and adjustments as activity levels change.
Overall, a flexible budget is suitable for businesses with variable or unpredictable expenses and those that need to adjust quickly to changes in the business environment in order to take advantage of the windows of opportunity. By understanding the advantages and disadvantages of a flexible budget, businesses can make an informed decision about which budgeting approach is best for their needs.
Datarails’ budgeting and forecasting software can help your team create and monitor budgets faster and more accurately than ever before.
By replacing spreadsheets with real-time data and integrating fragmented workbooks and data sources into one centralized location, you can work in the comfort of Excel with the support of a much more sophisticated data management system behind you.
Bajeti yenye kubadilika-badilika ni nini? Bajeti rahisi ni bajeti ambayo inabadilika kwa mabadiliko katika kiwango cha shughuli au pato. Tofauti na bajeti ya static, ambayo inategemea kiwango cha kazi au pato, bajeti ya kubadilika imeundwa ili kuendana na mabadiliko ya kiasi cha mauzo, kiasi cha uzalishaji, au vipimo vingine vya shughuli za biashara. Bajeti ya kubadilika kwa kawaida huundwa kwa kutambua gharama mbalimbali na gharama ambazo hutofautiana na mabadiliko katika viwango vya shughuli na kuhesabu gharama inayotarajiwa kwa kila ngazi ya shughuli. Kwa mfano, ikiwa biashara inauza vifaa na gharama ya uzalishaji wa kila kipengele hupungua wakati zaidi zinatengenezwa kwa sababu ya uchumi wa kiwango, bajeti ya kubadilika itaonyesha hii kwa kuonyesha gharama ya chini kwa kipengele kama uzalishaji unaongezeka. Faida ya bajeti rahisi ni kwamba hutoa picha sahihi zaidi ya utendaji wa biashara kwa kurekebisha kwa mabadiliko katika viwango vya shughuli. Hii inaweza kusaidia biashara kufanya maamuzi bora kuhusu shughuli zao, kutambua maeneo ambapo wanaweza kuboresha ufanisi au kupunguza gharama, na mpango bora kwa ajili ya ukuaji wa baadaye. Tofauti kati ya bajeti ya kubadilika na bajeti ya static ni kwamba bajeti ya kubadilika inabadilika kulingana na mabadiliko ya viwango vya shughuli, wakati bajeti ya static inabaki imara bila kujali mabadiliko ya viwango vya shughuli. Bajeti ya static ni kawaida msingi juu ya kiwango cha kudumu cha shughuli au pato na haina kubadilika na mabadiliko katika mauzo kiasi, kiasi cha uzalishaji, au vipimo vingine vya shughuli za biashara. Ni mara nyingi kuundwa katika mwanzo wa kipindi cha bajeti na si kurekebishwa kama kipindi kinaendelea. Bajeti ya static ni muhimu kwa kutoa msingi kwa ajili ya mipango na tathmini ya utendaji, lakini inaweza kuwa si kama sahihi kama bajeti rahisi. Kwa upande mwingine, bajeti rahisi imeundwa ili kukabiliana na mabadiliko katika viwango vya shughuli. Inazingatia jinsi mabadiliko katika viwango vya shughuli kuathiri gharama na gharama, na hutoa picha sahihi zaidi ya utendaji wa biashara. Bajeti rahisi ni kawaida kuundwa kwa kutumia mbalimbali ya ngazi ya shughuli na makadirio ya gharama zinazohusiana na gharama katika kila ngazi. Inaweza kurekebishwa kama viwango halisi vya shughuli kuwa inajulikana wakati wa kipindi cha bajeti. Hatua za kuunda bajeti rahisi - Tambua madereva muhimu ya biashara yako - Tafuta sababu zinazosababisha biashara yako, kama vile kiasi cha mauzo, kiasi cha uzalishaji, au idadi ya wateja. Kuamua ngazi ya shughuli: Kuamua juu ya mbalimbali ya ngazi ya shughuli kwamba biashara yako ni uwezekano wa uzoefu wakati wa kipindi cha bajeti, kama vile chini, kati, na ngazi ya juu ya mauzo au uzalishaji. - Makadirio ya gharama kwa kila ngazi ya shughuli- Hesabu gharama zinazotarajiwa kwa kila ngazi ya shughuli kwa kuvunja gharama yako katika gharama za kudumu na gharama variable. Gharama za kudumu, kama vile kodi au mishahara, zitabaki sawa bila kujali kiwango cha shughuli, wakati gharama za kutofautiana, kama vile vifaa vya mbinu au gharama za kazi, zitabadilika kulingana na kiwango cha shughuli. - Kuunda kubadilika bajeti spreadsheet- Kuandaa gharama kwa ngazi ya shughuli katika spreadsheet au bajeti programu. Tumia formula au kazi kwa moja kwa moja kuhesabu gharama zinazotarajiwa kwa kila ngazi ya shughuli. -Linganisha bajeti rahisi na matokeo halisi- Mara baada ya kipindi cha bajeti kuanza, kufuatilia matokeo yako halisi na kulinganisha yao na bajeti rahisi. Hii itakuruhusu kuona wapi matokeo yako halisi yanatofautiana na matarajio yako na kutambua maeneo yoyote ambayo unahitaji kurekebisha shughuli zako. - Marekebisho ya bajeti rahisi kama inahitajika- Kama wewe kupata kwamba matokeo yako halisi ni tofauti sana kutoka bajeti yako rahisi, marekebisho ya bajeti kutafakari habari mpya. Hii itakuwezesha kufanya utabiri sahihi zaidi kwa ajili ya vipindi vya baadaye. Mipangilio mitatu ya bajeti ya kubadilika: Mipangilio mitatu ya bajeti ya kubadilika ni ya msingi, ambayo inabadilisha gharama ambazo zinatofautiana moja kwa moja na mapato. Kwa mfano, fedha inaweza kujenga asilimia katika mfano wa msingi rahisi, ambayo wao kuzidisha kwa mapato halisi kuamua gharama katika kiwango maalum cha mapato. Haitoi kiwango kamili cha maelezo ambayo bajeti rahisi ingekuwa, lakini hutoa kubadilika na bajeti sahihi zaidi, ya kisasa kuliko bajeti ya kimya. Mipango ya kati ya kubadilika-badilika (intermediate flexible budget) ni bajeti ya kati ya kubadilika-badilika ambayo inazingatia gharama ambazo zinazidi mapato ya kampuni. Mapato ni hatua muhimu katika maamuzi ya biashara, lakini bajeti ya kati ya kubadilika inajumuisha gharama ambazo hutofautiana kulingana na vipimo vingine vya shughuli kama vile mishahara na faida kulingana na idadi ya wafanyikazi katika kampuni. Mipango ya Flexible ya Kabla ya Mipango ya Mipango ya Mipango ya Mipango ya Mipango ya Mipango ya Mipango ya Mipango ya Mipango ya Mipango ya Mipango ya Mipango ya Mipango ya Mipango ya Mipango ya Mipango ya Mipango ya Mipango Aina hii ya bajeti rahisi inachukua katika akaunti jinsi mabadiliko katika viwango vya shughuli kuathiri gharama zote na hutoa picha sahihi zaidi ya gharama zinazotarajiwa katika ngazi tofauti za shughuli. Mfano wa bajeti rahisi: Kwa mfano, unaweza kuwa na bajeti ya $ 10,000 kwa ajili ya gharama za chakula kwa mwezi, kulingana na idadi ya wateja wanaotarajiwa. Hata hivyo, mgahawa hupata ongezeko kubwa la trafiki ya wateja wakati wa wiki fulani, na kusababisha gharama za chakula kuongezeka. Ili kukabiliana na ongezeko hilo, mkahawa huo hutengeneza bajeti inayoweza kubadilika kulingana na idadi halisi ya wateja wanaotumiwa. "Hii ni jinsi bajeti rahisi inaweza kuonekana: ""Gharama za chakula: $ 1.50 kwa kila mteja x 3,000 wateja = $ 4.500 Gharama za kazi: $ 3.000 - kodi na huduma: $ 2.000 - Uuzaji na matangazo: $ 1.000 - Gharama nyingine: $ 1.000 Jumla ya bajeti rahisi: $ 1.500 Kama unavyoona, bajeti rahisi inabadilisha gharama za chakula zinazotarajiwa kulingana na gharama ya juu kwa kila mteja, na kusababisha $ 1,500 ya ziada katika bajeti ya jumla." Hii inaruhusu mgahawa kusimamia vizuri gharama zake na kufanya maamuzi ya habari kuhusu bei ya baadaye na matoleo ya orodha, uwezekano wa kuongoza kwa mgawo bora wa rasilimali na kuchukua fursa ya kuongezeka kwa wateja kupata faida kubwa. Faida za bajeti rahisi: - Uhalisi - Bajeti rahisi inaweza kutoa picha sahihi zaidi ya gharama za kampuni kwani inabadilisha mabadiliko katika viwango vya shughuli. - Kubadilika-Budget rahisi inaweza kukabiliana na mabadiliko katika mazingira ya biashara, kama vile mabadiliko katika mauzo kiasi au gharama zisizotarajiwa, na kufanya hivyo rahisi kusimamia shughuli na kufanya maamuzi ya taarifa. - Motivation- bajeti rahisi inaweza kuhamasisha wafanyakazi tangu inaruhusu marekebisho katika matumizi ya kufikia malengo yao. - Bora Uamuzi-Budget rahisi inaruhusu maamuzi zaidi taarifa, hasa katika hali ambapo kuna mabadiliko makubwa katika mazingira ya biashara. Hasara ya bajeti rahisi: - Utata - Bajeti rahisi inaweza kuwa ngumu zaidi kuunda kuliko bajeti ya kudumu, ikihitaji wakati zaidi na rasilimali kuandaa. - Ugumu katika Kulinganisha- Bajeti rahisi inaweza kuwa vigumu zaidi kulinganisha na matokeo halisi tangu inahusisha mbalimbali ya ngazi ya shughuli na gharama zinazotarajiwa. - Gharama ya juu - Bajeti rahisi inaweza kuwa ghali zaidi kutekeleza, hasa kama inahitaji rasilimali za ziada au programu kufuatilia gharama kwa usahihi. - Muda-kuchukua-Budget rahisi inaweza kuwa zaidi ya muda wa kusimamia, kuhitaji updates kuendelea na marekebisho kama viwango vya shughuli mabadiliko. Kwa ujumla, bajeti rahisi inafaa kwa biashara zilizo na gharama zinazobadilika au zisizoweza kutabiriwa na zile ambazo zinahitaji kurekebisha haraka mabadiliko katika mazingira ya biashara ili kutumia fursa za fursa. Kwa kuelewa faida na hasara za bajeti rahisi, wafanyabiashara wanaweza kufanya uamuzi wa habari kuhusu mbinu gani ya bajeti ni bora kwa mahitaji yao. Datarails bajeti na utabiri programu inaweza kusaidia timu yako kujenga na kufuatilia bajeti kwa kasi zaidi na kwa usahihi zaidi kuliko hapo awali. Kwa kubadilisha spreadsheets na data ya muda halisi na kuunganisha vitabu vya kazi na vyanzo vya data katika eneo moja la kati, unaweza kufanya kazi katika faraja ya Excel na msaada wa mfumo wa usimamizi wa data wa hali ya juu zaidi nyuma yako.