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A flexible budget shows the expected revenues and expenses for various levels of production or sales activity. This is much more useful than a static budget, which is fixed at a single amount of assumed corporate activity, which is likely to diverge greatly from actual activity over the budget period. Conversely, a company using a flexible budget can compare its results to a relevant model throughout its budget period. A flexible budget is also useful for planning over longer periods than the budget cycle, since it is easy to model different scenarios and see how they impact revenue and profit levels.

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