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$CFX Discuss the disadvantages/demerits/ limitations of flexible budget. Ans: Flexible budget has some limitations. They are as follows: 1. Too many variable: When one variable in a flexible budget is subject to changes other variables in the budget can also change too. 2. Cannot estimate taxes: Many organizations make estimated tax payment in which they pay money to tax collecting agencies on a quarterly basis of at the end of the year. But flexible budget give various changeable net income. So it is very difficult to estimate taxes. 3. Make prediction difficult : Another disadvantages of flexible budget is that by not allowing the manager to insert set figures, prediction is difficult. 4. Complicated This budget may be more complicated and take longer to prepare than a static budget. A static budget needs simple arithmetic but flexible budget need algebra. So we can say that, although various disadvantages flexible budget is more popular in various organizatios.
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