Which one of the following is a reason that a company may have significant deviations from budgeted performance?
A)Actual results were compared to flexible budget amounts instead of static budget amounts.
B)The budget was approved by the budget committee.
C)Economic conditions may have changed since the plan was developed.
D)A company has substantial variable costs.

Question

Quizplus · Accepted Answer

If economic conditions change since the original plan was developed, the company may face significant deviations from the budgeted performance even though it was approved by the budget committee. Factors such as interest rates, inflation, currency values, or market fluctuations can cause significant changes in the business environment that affect the company's revenue, costs, and profitability. Therefore, the budget may become obsolete or unrealistic in light of these external factors.

Which One of the Following Is a Reason That a Company