Distinguish Between Static and Flexible Budgets

question 155

Essay

Distinguish between static and flexible budgets.Give an example of how flexible budgets can be used.

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Definitions:

Average Total Cost

This refers to the total cost per unit of output, calculated by dividing the total cost of production by the number of units produced.

Marginal Cost

The rise in expense incurred from manufacturing an extra unit of a product or service.

Shutdown Point

The level of operations at which a company does not benefit from continuing operations or producing any output due to high variable costs.

Output

The total amount of goods or services produced by an economic system or entity within a given period.