A flexible budget
A) is prepared when management cannot agree on objectives for the company.
B) projects budget data for various levels of activity.
C) is only useful in controlling fixed costs.
D) cannot be used for evaluation purposes because budgeted data are adjusted to reflect actual results.

Question

Quizplus · Accepted Answer

A flexible budget projects budget data for various levels of activity, allowing management to adjust their plans and budget goals based on changes in activity levels. It is a useful tool for controlling variable costs and for evaluating actual results against budgeted data at different activity levels. A flexible budget is not prepared when management cannot agree on objectives for the company and can be used for evaluation purposes as budgeted data can be adjusted to reflect actual results.

A Flexible Budget