flexible budget to accommodate for varying levels of activity such as sales volume. As the name implies, “flexible budgets flex, or change, when the volume of activity changes” (Edmonds, Edmonds, Olds, McNair, Tsay, & Schneider, 2007, p. 1061). Both the flexible budget and the master budget (also called a static budget), utilize “the same per unit standard amounts and the same fixed costs” (Edmonds, Edmonds, Olds, McNair, Tsay, & Schneider, 2007, p. 1062).
Insert: Zumara’s paragraph on relationship between fixed and variable costs
Insert: Charles’s paragraph on differences between static and flexible budgets
(Insert: Nanda’s paragraph on flexible budget lends itself to cost-volume-profit analysis:)
Costs, sales volume and profitability all play roles in a company's selection of the optimal pricing strategy.
