A static budget is usually appropriate in evaluating a manager's effectiveness in controlling
A) fixed manufacturing costs and fixed selling and administrative expenses.
B) variable manufacturing costs and variable selling and administrative expenses.
C) fixed manufacturing costs and variable selling and administrative expenses.
D) variable manufacturing costs and fixed selling and administrative expenses.

Question

Quizplus · Accepted Answer

A static budget includes fixed costs and does not take into account changes in activity levels. Therefore, it is appropriate for evaluating a manager's effectiveness in controlling fixed costs, such as fixed manufacturing costs and fixed selling and administrative expenses. A static budget is not appropriate for evaluating a manager's effectiveness in controlling variable costs, such as variable manufacturing costs and variable selling and administrative expenses, as these costs will vary with changes in activity levels.

A Static Budget Is Usually Appropriate in Evaluating a Manager's