Flexible Budget
Accounting glossary · Understand, connect, apply
A flexible budget adjusts expected revenues or costs to a specified activity level using defined cost-behaviour assumptions. A budget flexed to actual activity improves like-for-like performance comparisons.
Example
Budgeted variable cost is 6 per unit and fixed cost is 4,000. At actual output of 1,500 units, the flexible cost budget is 13,000.
Remember the difference
Flexing is not replacing standard prices or efficiency assumptions with actual results. Keep the benchmark assumptions visible so that the comparison still reveals meaningful differences.
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Published 4 November 2026. Prepared with AI assistance; examples are fictional and simplified for learning.
Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
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