Running heading: FINANCE
I agree thatFlexible budget is a budget that adjusts revenues and expenses basedon service volume. It improves targeted levels of costs for changesof volume. Forecast budget is planned ahead of time, and it is basedon owner’s education about future activities. It is true there arefactors that may make someone use flexible budget rather thanforecast budget. If budgeting is based on money at hand flexiblebudgeting is likely to be used rather than forecast since it is basedon the projection (Kendrick, 2012). Flexible budgeting helps in thereview of sales and profit margin giving room for the company todetermine whether it is cost-effective to produce and maintain them.This method of budgeting also ties spending to sales that gives roomto increase spending and take advantage of opportunities that arepresented well than expected revenues. Flexible budget allows roomfor change as new data become available unlike forecast that relieson data that is current (Cleverley et al., 2011). In order forBudget Department to approve or disapprove a project they consider ifthe project is important and will it will benefit the organization.Basing on the merit of the project the department verifies if thecompany can fund the project without renovation or programming(Cleverley et al., 2011). The staff estimates reasonable cost of theproject including its allocation for furniture and equipment. Asbudgeting department uses the above factor, they are entitled to beeffective and efficient to ensure no misuse of the organizationresources. It emphasizes on transparency and making sound businessdecision enhances accountability of the project to be approved(Cleverley et al., 2011)
Cleverley,W.O., Cleverley, J.O., & Song, P.H. (2011) Essentialsof Health Care .(7th Edition). Jones & Bartlett Learning. Sudbury, MA.
Kendrick,T. (2012). Identifyingand managing project risk: Essential tools for failure-proofing yourproject. New York:AMACON.