When is a flexible budget prepared in comparison to a simple budget?

A flexible budget is prepared after actual service volume is known because it allows organizations to adjust their budgeted figures based on the actual level of activity. This type of budgeting accommodates variations in activity levels, providing a more accurate reflection of financial performance as it correlates budgeted revenues and expenses with the actual services provided.

In contrast, a simple budget typically reflects planned activities and anticipated costs at the start of the fiscal year or period, without adjustments for variations in actual performance. Therefore, flexible budgets serve as dynamic tools that enable management to analyze performance against the actual output, facilitating better decision-making and resource allocation.