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Budgeting & Forecasting › Flexible Budgets

What is meant by 'flexing' a budget?

Beginner

Answer

Flexing means recalculating the budget for the activity level actually achieved—scaling variable costs to actual volume while holding fixed costs—to create a comparable benchmark for actual results. It converts a static plan into an 'allowed cost' for the real level of output.
Real-world example The analyst flexes the budget to the actual 11,500 units before comparing to actual spend.

Common follow-ups: What does flexing scale? | What does it produce?