Variable

Budget
DEFINITION
A variable budget is a cost schedule that shows how
individual costs will change with changes in volume,
out put, or activity.
Thus a variable budget expresses the relationship
between volume and cost within a limited
relevant limited volume range

A variable budget is a cost whose amount

changes proportionally with changes in the
volume of activities.

In the book Business Budget by Drs. Gunawan

Adisaputro, M.B.A. and Yunita Anggarini, S.E.,
M.Si
Usability of variable
budgets
In general, as a dynamic monitoring tool, it can easily
calculate expenses allowance or adjusted expensed budget
at various levels.

While specifically, variable budgets are useful for:

a. The basis for budget calculations in a department
b. The basis for calculating targeted costs, if the planned
activities in the department are revised (improved).
 Factors in Budgeting Variable

Determination of activity units Determination of Relevant

Goals 4
Range
The level of activity in a company must be expressed in Relevant Ronge needs to be determined because fixed costs
terms of one activity and variable costs per unit can change at certain output levels.
(actual base), for example: unit can change at a certain output level, so these costs must be
a. Direct machine hour (DMH) linked to a certain relevant range. associated with a certain
b. Direct labor hour (DLH) relevant range
c. Direct repair hour (DRH)
d. Kilo watts per hour (KWH)
 Fixed and Variable Component
Separation Method
Direct Method
based on the results of research in
the factory or on the basis of
analysis of historical data
supplemented by interpretation of
management decisions that are
related to the historical data
concerned.
High and Low Point
Method
by separating fixed and variable
cost components by interpolating
calculations between two different
output volumes or activity levels.
Statistical Method
by using linear regression. The
estimated results obtained can be
used as a basis for future
estimates in relation to the the
relationship between volume
changes and cost changes
 EXAMPLE
HIGH AND LOW
METHOD
Interpolation
In High point 12.000 Rp. 6.400.000
in Low Point (9.000) (Rp. 5.200.000)
Relevant range: 9,000-12,000 DMH, meaning: 3.000 Rp. 1.200.000
At the highest point = 12,000 DMH variable cost/unit
At the lowest point = 9000 DMH = 𝑅𝑝.1.200.000/3.000 = Rp. 400
Cost budget:
At the highest point = Rp 6.400.000,- Cost budget = Rp.6.400.000
At the lowest point = Rp 5.200.000,- Variable Cost = 12.000 × Rp. 400 = (Rp.4.800.000)
Fixed Cost = Rp.1.600.000
EXAMPLE
 A . D E V E LO P A D E TA IL E D VA R IA B L E B U D G ET IN TA B L E
ANSWER
WIT H R E LE VA N T R A N G E O F MU LT IPLE S O F 2,000 D R H .
 B . C R E ATE A VA R IA B L E B U D G E T IN FO R MU L A FO R M.
ANSWER
 B . C R E ATE A VA R IA B L E B U D G E T IN FO R MU L A FO R M.
ANSWER
 B . C R E ATE A VA R IA B L E B U D G E T IN FO R MU L A FO R M.
ANSWER
 C . D ET E R MIN E T H E C O ST T H AT SH O U L D B E PR O V ID E D
IF T H E R EPA IR D E PA RT ME N T IS WO R K IN G AT A
rate of 15,200 D R H
ANSWER
 THANK YOU

BY CLAUDIA ALVES