Q:

What is a flexible budget?

A:

Quick Answer

A flexible budget is one that can flex or adjust as needs change, as noted by Accounting Coach. This type of budget differs from a static budget that remains at the same amount regardless of changing needs.

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Full Answer

The flexible budget allows departments to have access to needed cash when sales or production are increased. For instance, this type of budget may make a certain percentage of money available to a particular department if that department's revenues increase by a specific number. A flexible budget might have room for 5 percent more money to be routed to a department when the revenue of that department increases by 5 percent, for example.

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