Budgets allow a business to create a financial roadmap by setting goals and working to achieve those goals. A budget is an instrument of management used as an aid in the planning, programming and controlling of business activities. The purpose of budget includes forecasting the income and expenditure of business. An effective budget must be well planned, flexible, realistic and clearly communicated. A fixed budget is a budget that doesn't change due to any change in activity level or output level. In a business environment change is real and constant. A flexible budget can handle the change and gain competitive advantage for the organization in a flexible market. The flexible budget is a budget that changes as per the activity level or production of units. The greatest advantage that a flexible budget has over a fixed budget is its adaptability. It clearly shows the impact of various expenses on the operational aspects of the business. Meanwhile for fixed budget it is difficult to forecast accurately. The presentation gives in-depth knowledge on the topic.

Abhijith S

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