THE FLEXIBLE BUDGET – A PERFORMANCE EVALUATION MANAGEMENT TOOL

Galina BĂDICU Academia de Studii Economice a Moldovei

Abstract

The flexible budget is a management accounting tool, used to measure the performance in order to reflect the real productive output. Given the importance of budgeting in the entity's activity, the first study objective of this paper emphasizes the significance of the flexible budget. Undoubtedly, a flexible budget enables managers to calculate deviations, which provide more information than those that can be deduced from the deviations related to a static budget. This article aims to show the importance of a flexible budget, the stages of developing a flexible budget and the analysis of the deviations. In this respect, after a brief theoretical consideration of the concept of a flexible budget, we will further present a practical application. Keywords: performance evaluation, effectiveness, efficiency, economy, budget controlstatic budget, flexible budget, favorable deviation, unfavorable deviation.