Accounting

We answer your accounting questions.

Over 500 questions have been answered on our accounting blog. Click here to suggest a question.



February 25, 2009

What is a static budget?

A static budget is a budget that does not change as volume changes. If a company’s annual master budget is a static budget, the budget for sales commissions expense will be one amount such as $200,000 for the year. In other words, in a static budget the budgeted amount for sales commissions expense will remain at $200,000 even if the actual sales during the year are $3 million, $4 million or $5 million.

In contrast to a company’s static master budget, the company’s sales department might have a flexible budget. In the flexible budget, the sales commissions expense budget might be expressed as 5% of sales. In that instance, the department’s budget for sales commissions expense will be $200,000 when actual sales are $4 million, but it will decrease to $150,000 when actual sales are $3 million, and the budget will increase to $300,000 when actual sales are $6 million, and so on.

Related Questions



Comments

6 Responses to “What is a static budget?”

  1. mathew on February 28th, 2009 3:23 am

    how to find out IRR

  2. krishna reddy on March 3rd, 2009 11:19 pm

    Good Morning sir\madam

    Accounts coach .com site very use full learns and student very thankful for our site

    yours faithfully
    krishna reddy

  3. Simkoung on March 18th, 2009 4:31 am

    I am very thanks to accounting caoch that always send me with quetion and answer related with accounting.

    these questions and answer are very useful for me in study and work so I hope that I can receive more from accounting caoch.

    Your sincerely,

    Simkoung Seang

  4. varun sheel on March 31st, 2009 6:15 am

    thnx 2 accounting coach

  5. adebiyi kayode on April 25th, 2009 12:16 pm

    pls give me more question to read

  6. ntume on October 26th, 2009 4:03 pm

    Thanks to accounting couch

Leave a Reply