Perhaps the single most tedious part of updating a budget is altering the myriad expense line items every time someone makes a change to the estimated revenue level. Revenue is far and away the most commonly tweaked number in a budget, so the underlying expenses have to be continually recast to be in proper proportion to the changed revenue levels. This is a major chore not only for the accounting staff maintaining the budget, but also for those managers who must be contacted about changes to the expense levels they had previously authorized.
A recasting of the budget model will largely eliminate this problem. Instead of making changes to the expense line item for every expense in the budget, it is much easier to set up each one as either a flexible expense account or one that is fixed within a broad range of revenue levels. If it is fixed, there is no need for change, unless there is an enormous alteration in budgeted revenue levels. However, many other expenses will vary directly with revenue; in these cases, it is possible to revise the budget formulas so that they are listed as percentages of the monthly revenue level. By making these formula alterations, it becomes an easy matter to adjust revenue and see a swath of expense changes ripple through the budget model - with no manual intervention whatsoever.
Though the flex budget discussion has centered on tying expenses to specific revenue levels, it is also possible, and probably more accurate, to tie some expenses to other levels of activity. For example, telephone usage or office expenses should be linked more properly to the number of budgeted employees, while utility costs can be tied either to square footage used or the number of machines in operation. Thus, it is possible to link expenses to a number of activity measurements in a flex budget.