What is the point in flexing the budget in the context of variance analysis 2023 Business & Finance

2023 What is the point in flexing the budget in the context of

What is the point in flexing the budget in the context of variance analysis? Does flexing imply that differences between the budget and actual volume of output are ignored in variance analysis? Explain your answer in the context of this week’s readings.

The journal article prescribed for this week is required reading and can be found in the online library at the University of Liverpool:

Guven-Uslu, P. & Conrad, L. (2008) ‘Uses of management accounting information for benchmarking in NHS trusts’, Public Money & Management, 28 (4), pp. 239–246, Wiley Interscience [Online]. DOI: 10.1111/j.1467-9302.2008.00650.x (Accessed 30 June 2009).


Atrill, P. & McLaney, E. (2012) Management accounting for decision makers. 7th ed. Harlow, England : Pearson Education Ltd.

(Please note that the references to these readings can be found in the Lecture Notes text under the headings of the topics to which they relate.)

Budgets and strategic planning

Pages 187–195 in Chapter 6 explore the role that budgets play within the strategic planning process. The authors also introduce the planning and control process.

Budgets for performance evaluation

Pages 196–222 in Chapter 6 examine the intricacies of budgets, including the process through which they are developed. It is important to understand how budgets can be used to evaluate performance.

Variance analysis

Pages 2329–254 in Chapter 7 discuss the process of analysing variations within budgets. The differences from original budget figures and actual figures must be examined in order to understand what changes occurred and what can be done to rectify the situation—namely, to reduce or eliminate the variation.

Effective budgetary control

Pages 254–259 in Chapter 7 explore how organisations need to develop systems that support the budget process and how information is collected and reported. The authors also discuss behavioural aspects of management styles. 

Standard costing

Pages 260–268 in Chapter 7 examine how standards for costs, revenues, and quantities are developed by organisations when developing budgets. The reading also addresses considerations when using standards and problems that may occur.

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