A flexible budget would show $48,000 (12,000/10,000 x 40,000) for the direct labor cost, $4,800 (12,000/10,000 x 4,000) for the electric power cost, and $24,000 of total fixed cost at 12,000 units of production. The static budget is a budget which does not change parallelly with the changes production unit. The flexible budget is a budget which changes parallelly with the changes production unit. The fixed cost does not change in the flexible budget because of its cost behavior.
