Does the flexible budget term mean A series of budgets for varying rates of activity?
Yes, the term "flexible budget" does refer to a series of budgets that are prepared for varying levels of activity. A flexible budget is designed to adjust and adapt based on the actual level of activity that occurs. It allows for changes in activity levels to be taken into account when preparing financial plans and forecasts.
To calculate a flexible budget, you typically start with a base budget or standard budget, which represents the planned expenses and revenues based on a certain level of activity. Then, you adjust the budgeted amounts based on different levels of activity, allowing for changes in costs and revenues that are likely to occur as the activity level varies.
Flexible budgets are valuable tools for businesses and organizations because they help in analyzing the impact of different levels of activity on financial performance. By comparing actual results with the flexible budget, managers can assess how well they performed relative to their initial expectations and make informed decisions for future planning.
In summary, the term "flexible budget" does indeed refer to a series of budgets that account for varying rates of activity, and it is an important concept in financial planning and analysis.