Flexible Budget Vs. Fixed Budget

PointsFlexible BudgetFixed Budget
FlexibilityDue to its nature of flexibility, it may be quickly re-organized according to the level of production.After the commencement of a period, fixed budget cannot change according to actual production.
ConditionFlexible budget may change according to change in conditions.Fixed budget is based on the assumption that conditions will remain unchanged.
Cost ClassificationClassification of costs is done according to the nature of their variability.It is suitable for fixed costs only; no classification is done in fixed budget.
ComparisonComparisons of actual figures with revised standard figures are done according to change in the production level of a concern.If there is change in production level, then it is not possible to do a correct comparison.
Ascertainment of costIt is easy to ascertain costs even at different levels of activity.If there is change in the production level or circumstances, it is not possible to ascertain costs correctly.
Cost ControlIt is used as an effective tool to control costs.Due to its limitations, it is not used as cost control tool.

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