Types of Budget 1. Fixed Budget (Static Budget) It is prepared keeping in mind one level of output Which is designed to remain unchanged irrespective of the level of activity attained If actual output differs from budgeted level of output, variance will arise Assume that output & sales can be estimated with a fair degree of accuracy It is does not suit fora dynamic environment. 50
Cont… 2. Flexible Budget Which is designed to change in relation to the level of activity attained More realistic than a fixed budget It is adaptable to any given set of operating conditions.
