Definition of Static budget:
A static budget is a type of budget that incorporates anticipated values about inputs and outputs that are conceived before the period in question begins. A static budget–which is a forecast of revenue and expenses over a specific period–remains unchanged even with increases or decreases in sales and production volumes. However, when compared to the actual results that are received after the fact, the numbers from static budgets can be quite different from the actual results. Static budgets are used by accountants, finance professionals, and the management teams of companies looking to gauge the financial performance of a company over time.
Fixed budget based on anticipated costs and expenses prior to the fact. At the end of a period, static budget figures may vary widely from the actual figures during that period. Also called fixed budget.
The static budget is intended to be fixed and unchanging for the duration of the period, regardless of fluctuations that may affect outcomes. When using a static budget, some managers use it as a target for expenses, costs, and revenue while others use a static budget to forecast the company's numbers.
How to use Static budget in a sentence?
- A static budget incorporates expected values about inputs and outputs that are conceived prior to the start of a period.
- Unlike a static budget, a flexible budget changes or fluctuates with changes in sales and production volumes.
- A static budget forecasts revenue and expenses over a specific period but remains unchanged even with changes in business activity.
- Static budgets are often used by non-profit, educational, and government organizations.
Meaning of Static budget & Static budget Definition