Overview of Flexible Budgeting
The flexible budgeting process enables you to differentiate between fixed and variable costs due to which the budget can be adjust automatically by modifying the variable cost totals to the specific level of activity that is actually accomplished.
In Infor ERP LN Financials, a flexible budget is used to assess the budget variables and fixed costs for dimensions, for example, cost centers. These costs are determined through reference unit (cost drivers).
The budget is a vertical budget, and is therefore referred as a single dimension budget
Using the actual performance data, you can allocate the budgeted costs of dimensions to other dimensions, which helps determine the rates/surcharges for each dimension. These calculated rates/surcharges of a flexible budget can be integrated with the Cost Price Calculation functionality.
When you report the actual costs with the budgeted costs, Infor ERP LN calculates allowed costs which results in these variances:
- Occupation deviation
- Consumption deviation
- Over coverage/Under coverage