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<p>also explain how a flexible budget can be used to help control cost</p>
Budget is a plan for where a business wants to go, while a forecast is the indication of where it is actually going. So if you are not able to forecast sales accurately or these are subject to error how one can say that there is no purpose of deciding where i wants to go (it is a decided goal)
A forecast is at the best an estimate and extrapolation of the past considering some given future events. Budget itself is based on certain forecasts and assumptions. It is a financial plan aimed at using the resources effectively to achieve the planned returns. The budget plays its part despite variations with the actuals. In absence of budgeting the road map may not be clear and the organization may not achieve good results.
Nevertheless, some professionals argue that budget is a straight jacket that limits flexibility in actions and decisions and may do more harm than any doing anything good.
no, i don't agree
as the sales is very difficult to expect perfectly. but still the budget could be meaningful because we should reconcile the sales unit to form the flexible budget to use to identify variances in the whole budget other-than sales units.
