Difference between a static budget and a flexible budget, Managerial Economics

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1.  What is the difference between a static (master) budget and a flexible budget?

Ans:  static budget is where a budget doesn't change a volume changes.  An example could be that if the budget started out at $300,000, yet sales were $500,000, the budget would remain at $300,000.  A flexible budget would adjust for changes in activity and volume either via an increase or decrease in price.


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