# Fixed vs flexible budget. Fixed Budget vs Flexible Budget 2022-11-09

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The pigeonhole principle, also known as the "boxes and pigeons" principle, is a simple but powerful concept in mathematics that states that if there are more objects than available spaces (or "pigeonholes"), then at least one space must contain more than one object. This principle has many applications in various fields, including computer science, economics, and even daily life.

One of the most common applications of the pigeonhole principle is in computer science, specifically in the field of data compression. In data compression, the goal is to represent a large amount of data using a smaller number of bits. One way to do this is by using a technique called "lossless compression," where the original data can be recovered exactly from the compressed version. The pigeonhole principle can be used to prove that certain lossless compression schemes are optimal, meaning that no other scheme can compress the data more efficiently. For example, suppose we have a set of data consisting of the letters A, B, C, and D. If we want to represent this data using only 2 bits per letter, we can use the pigeonhole principle to prove that at least one of the letters must be represented by two different combinations of 2 bits. This means that the data cannot be losslessly compressed using 2 bits per letter, and we must use a different method or a higher number of bits to achieve optimal compression.

Another application of the pigeonhole principle is in economics, specifically in the study of market equilibrium. Market equilibrium occurs when the quantity of a good or service that is being supplied is equal to the quantity that is being demanded. The pigeonhole principle can be used to prove that under certain conditions, market equilibrium is always possible. For example, suppose we have a market for a certain type of good, and there are three sellers who each have a certain number of units of the good to sell. The pigeonhole principle states that if the sellers have a total of more than three units of the good, then at least one of them must have more than one unit to sell. This means that there must be at least one buyer who is willing to purchase more than one unit of the good, which is necessary for the market to reach equilibrium.

In daily life, the pigeonhole principle can also be used to solve practical problems. For example, suppose you have a group of friends who are going on a road trip, and you need to decide which car to take. You have three cars to choose from, each with a different number of seats. The pigeonhole principle states that if you have more friends than the total number of seats in the three cars, then at least one of the cars must have more than one person in it. This can help you decide which car to take, and also serve as a reminder to carpool to save space and reduce environmental impact.

In conclusion, the pigeonhole principle is a simple but powerful concept that has many applications in various fields, including computer science, economics, and daily life. Its versatility and simplicity make it a valuable tool for solving a wide range of problems.

## FIXED & FLEXIBLE BUDGET in Accounts and Finance for Managers Tutorial 06 January 2023

Staff and their compensation Outline your team and their compensation. For example, the cost of renting a plant will typically remain the same no matter the level of output. Both budgeting styles have their place. Flexible budget accounting is meant to shift with the activity needs of the business. Flexible budgets are mostly preferred by firms because they allow the firm to conduct scenario planning and better adjust for unexpected situations. Fixed Budget helps the management to set the revenues and expenses for the period, but it lacks accuracy because it is not always possible to correctly determine future needs and requirements. But it is also important to measure their performance on a fair basis.

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## Difference Between Flexible Budget and Fixed Budget

This budget is mainly meant for the fixed overheads of the firm which are constant in volume irrespective level of production. Definition of Flexible Budget Flexible means easily adjustable, and Budget refers to an anticipated plan made for the financial activities of the entity. Fixed Budget A fixed budget is a budget that is prepared at a single level of activity at the start of a period. Fixed Vs Flexible Budget â€” Main Difference When it comes to budgeting, there are two main types of approaches that businesses take â€” fixed budgets and flexible budgets. First, you will have to categorize costs into fixed, variable, and mixed.

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## Fixed, Flexible and Flexed budgets

There are a few key factors that influence app pricing: Functionality What function and purpose will the app serve for users? The activity level here may refer to different cost drivers affecting the variable costs such as labor hours, direct materials, or sales commission, etc. A cheaper cost for developing an app may seem appealing to your stakeholders and to your budgets, but it may end up costing you more in the long run. Consequences The dissonance between the actual level and the budgeted level is quite high since there is no similarity in activity level The dissonance between the actual level and the budgeted level is quite low. The original budget for selling expenses included variable and fixed expenses. Business Post Nigeria â€” Business Post Nigeria 2022: What is Your Video Marketing Plan? So what makes a flexible budget easily adjustable? This can be good for Fixed Budget Vs Flexible Budget Comparison Table 8 Key Differences Between Fixed And Flexible Budget There are a few key differences between fixed and flexible budgets that you should be aware of.

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## Fortnight

In such cases, a flexible budget might be essential to see how budgeted costs vary from one season to another. Is this something you can provide in-house or will you require support from your developers? Continuing our discussion with the above example, a flexible budget will increase or decrease according to the actual number of items produced, i. You will have to plan ahead for your likely costs and, thus, you will have the budget and tools in place for your team when you need them. Such budgets are most useful for businesses that operate in an ever changing business environment, and have the need to prepare budgets that are able to reflect the many outcomes that are possible. This can give you a bottom line and an outline to follow.

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## Breaking Down Your IT Budget: Fixed vs. Flexible Costs

Select the activity level generally in terms of output 2. Zero-based budgeting is different from traditional budgeting, where incremental increases are added to the budget each period regardless of performance. For example, the production volume is highly dependent on customer demand. Meaning A fixed budget is a budget that remains static irrespective of the activity level. It is prepared based on long-term corporate objectives.

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## Difference Between Fixed Budget And Flexible Budget(With Table)

As a result, it is referred to as a rigid or inflexible budget. Financial professionals are familiar with the fact that real-world results almost never align perfectly with the budget, even when careful steps are taken to account for variables. Of course, it can be impossible to predict some of these factors at the outset of a project, as development can evolve and shift throughout the process. This type of budget is typically used in businesses where costs are relatively stable and predictable. Flexible budgets are more often used in businesses where income and expenses can vary greatly from one period to the next. This approach continuously updates budgets on a monthly or quarterly basis as in the rolling budget approach.

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## Difference Between Fixed and Flexible Budget (Top 9)

When accounting for the end of a production cycle's actual expenses, the static budget variance needs to be combined with the actual initial static budget in order to achieve accurate financial reporting. For the most accurate information, please ask your customer service representative. What is a Flexible Budget? Since it operates on a single activity level, it requires less time to prepare than a budget plan that considers different activity levels. When you calculate both variances, one is favorable and the other is not. So, it needs no amendment when activity level changes.

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## What Are the Differences Between Fixed, Flexible, & Zero Based Budgeting Processes?

Clarify all fees and contract details before signing a contract or finalizing your purchase. These types of budgets are most difficult to achieve as variances are bound to happen. A possible disadvantage of this form of budgeting is known to be the fact that they may be complicated to prepare, especially when the scenarios being considered are numerous in number, and complex in nature. Flexible budgets use more realistic forecasts and can therefore be more accurate when predicting outcomes. Other costs such as repairs are unpredictable and may be very high or low â€” an estimated figure based on past experience. See also What is Project Budget? Integration Will it require integration with third-party applications? Each element of cost is analysed according to its behaviour, i.

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