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This kind of budget informs the business about what static budget have been used from the period of budgeting by utilizing actual output figures (Small Business - Chron.com, 2015). As an example, if static budget is covering the production of estimated 500 units, however just 250 units were created so the flexible budget will just take 250 units into its account. Advantages Some of the advantages of flexible budgeting are as follows; Cost of Production It is essential to properly understand the overhead and manufacturing costs to know our sale’s true cost. Flexible budget recalculates the overhead and production costs which is based on total number of units sold or data of sales. The variance of flexible budget compares and evaluates with the actual outcomes in order to figure out the effects that prices and costs have on the operations. Production or sales volume During the period of budgeting a flexible budget provides more control in production or in sales volume. It also allo...

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Business
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The advantages of a flexible budget technique used for forecasting sales and production volume.

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