When setting a flexible budget it is important to know
A)the expected profit that a firm requires.
B)the expected return that the shareholders or owners require.
C)the relevant ranges of activity and cost.
D)the impact of inflation on the budget in the year to come.

Question

Quizplus · Accepted Answer

Setting a flexible budget requires knowledge of the relevant ranges of activity and cost. This is because a flexible budget is designed to adjust to changes in activity levels, so understanding the cost behavior within these relevant ranges is crucial. The expected profit or return requirements may influence the overall budgeting process, but they are not specifically necessary for setting a flexible budget. Inflation is also not necessarily relevant to setting a flexible budget, as it focuses more on adjusting for changes in activity levels.

When Setting a Flexible Budget It Is Important to Know