A budget that does not change with varying activity levels is known as?

A budget that does not change with varying activity levels is known as a static budget. Static budgets are prepared based on a specific level of activity, meaning that once the budget is established, it remains unchanged regardless of the actual level of activity that occurs.

This type of budget is particularly useful in environments where costs are stable and predictable, as it provides a baseline for financial performance. For example, if a healthcare facility sets a static budget for staffing or supplies based on expected patient volumes, the budget remains fixed even if actual patient volumes fluctuate.

In contrast to a static budget, a flexible budget adjusts to different levels of activity, allowing for a more accurate comparison of budgeted versus actual results. A fixed budget is often used synonymously with static budget but can imply smaller constraints regarding revenue or expenses. Variable budgets, on the other hand, are designed to fluctuate according to changes in activity levels, which is the opposite of the characteristic inherent in a static budget. Thus, understanding the nature of a static budget is essential for effective financial management and analysis in healthcare settings.