Distinction between Fixed budget and Flexible Budget
| Fixed Budget:- It cannot be changed with the volume of activities. Whereas Flexible Budget:- It can be changed with the volume of activity. |
| Fixed Budget:- All costs are concerned with one level of activity only. Whereas Flexible Budget:- It involves classifications of costs by their behaviour. As fixed costs and variable costs. |
| Fixed Budget:- Cost ascertainment does not provide a correct result if budget and actual activity levels vary. Whereas Flexible Budget:- But with the help of a flexible budget we can determine Selling price of a product. |
| Fixed Budget:- Ascertainment of costs is not possible in fixed costs. Whereas Flexible Budget:- Costs can be ascertained easily at different levels of activity. |
| Fixed Budget:- It has limited application for cost control. Whereas Flexible Budget:- It has more application and can be used as a tool for effective cost control. |
| Fixed Budget:- It is rigid budget and based on the assumption that conditions would remain constant. Whereas Flexible Budget:- It can be changed according to the changed conditions. |
| Fixed Budget:- Here it will be difficult to compare actual and budgeted performance cannot be done correctly because production volume is different. Whereas Flexible Budget:- Here Comparison are realistic according to change in the level of activity. |
| Fixed Budget:- Costs are not classified as fixed costs, variable costs and semi-variables. Whereas Flexible Budget:- All Costs are classified as per the nature of their variability. |
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