Who Uses Static Budgets?

Who Uses Static Budgets?

Static budgets are typically used by companies that do not expect sales and expenses to vary much during the budgeted period. A static budget is set before the budgeting period begins and stays the same throughout the period regardless of actual sales activity.

Static budgets are normally used to compare the expected sales with the actual results. The difference between the expected and actual sales is known as the static budget variance. A large variance in sales indicates that a fluid budget may be more effective since the budget can be adjusted based on actual sales figures throughout the period.