Chapter 7 - Flexible Budgets, Direct-Cost Variances, and Management Control - Assignment Material - Questions - Page 274: 7-4

The key difference between a static budget and a flexible budget is the timing of their preparation and the basis for calculation. A static budget is developed at the beginning of the budget period and is based on a single planned output level. In contrast, a flexible budget is prepared at the end of the period after the actual output is known, taking into account the actual level of output achieved during the budget period. It is a hypothetical budget that aligns with the actual output rather than the initial plan.

The key difference between a static budget and a flexible budget is the timing of their preparation and the basis for calculation. A static budget is developed at the beginning of the budget period and is based on a single planned output level. In contrast, a flexible budget is prepared at the end of the period after the actual output is known, taking into account the actual level of output achieved during the budget period. It is a hypothetical budget that aligns with the actual output rather than the initial plan.