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A flexible budget is helpful when a business faces constant changes in costs or income, like seasonal demand or shifts in production. Unlike a fixed budget, which is set in advance, a flexible budget adjusts to real activity levels. This approach is useful in industries like healthcare, where patient numbers vary, helping organizations adjust spending to match actual needs and providing a clearer picture of financial performance.

A fixed budget, also called a forecast budget, is set at the beginning of a period and remains the same, regardless of changes. It$$s ideal for stable environments where expenses and revenues are predictable. Fixed budgets work well in settings where operations follow a consistent pattern, though they may lack the adaptability needed during unexpected changes.

In short, flexible budgets are ideal for variable situations, while fixed budgets suit more stable environments. Choosing the right budget type can help organizations maintain financial control and better meet their needs $($McLean$,2022).$