👉 A budget fluid, often referred to as a flexible budget, is a financial tool used in management accounting that allows for adjustments based on actual performance and changes in business conditions. Unlike a fixed budget, which remains constant regardless of output levels, a budget fluid can vary with the level of activity. This means that as production or sales increase, the budget is adjusted to reflect the higher expected costs and revenues, providing a more accurate basis for decision-making. This adaptability helps organizations manage resources more effectively and respond to market dynamics, making it a valuable tool for strategic planning and operational control.
