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Comparing and contrasting flexible budgets and static budgets are widely used, and they represent some similarities and differences in various ways. Flexible and static budgets are essential for an organization, and each company has its recommendable budget that can align with particular organizational goals. The identified similarities are that both flexible budget and static budget are majorly used in large businesses to provide business managers with significant insight into the causes of variances in the company. Besides, both flexible and static budgets are estimates of revenues and expenses in a particular future period depending on the organization.
Differences
The static budget does not change when the volume changes in the organization; the budget remains stagnant until the end of the financial year. Also, a static budget is based on the output level projected in an organization before beginning a financial year. On the other hand, a flexible budget is the performance tool for the organization; it is usually prepared at the beginning of the financial year and can provide cost estimates for various organizational activities. A flexible budget is prone to changes in line with the change in the volumes in the organization (Ghofur, Agustina & Elvierayani, 2019). A flexible budget is used to enhance planning in an organization and enhance performance reviews because it can calculate its costs.
Therefore, I can recommend the use of a flexible budget for Apple Inc. It has a significant deal of leeway regarding valuable and essential expenses for the company considering the market is unpredictable. Therefore, the flexible budget can change according to changes in the market. Besides, for Apple Inc. to use a flexible budget, it helps to reflect the expenditure that is appropriate to various levels of output. The spending that is established from the use of a flexible budget is essential as it enhances comparison of the actual expenditure that Apple Inc. incurred with the relevant budget applied to the specific level of activity attained. Therefore, the company can easily project their profits from the business operations as the flexible budget enhances easy comparisons of the expenditures with the actual expenditures.
Reference
Ghofur, A., Agustina, N., & Elvierayani, R. R. (2019). Evaluation of production cost control using flexible budget and direct-cost variance in restaurant lamongan sport center: evaluation of production cost control using flexible budget and direct-cost variance in restaurant lamongan sport center. Jurnal Mantik, 3(3), 162-166.
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