What is the primary difference between a static budget and a flexible budget?
A) The static budget contains only fixed costs while the flexible budget contains only variable costs.
B) The static budget is prepared for a single level of activity while a flexible budget is adjusted for different activity levels.
C) The static budget is constructed using input from only upper level management while a flexible budget obtains input from all levels of management.
D) The static budget is prepared only for units produced while a flexible budget reflects the number of units sold.

Question

Quizplus · Accepted Answer

The primary difference between a static budget and a flexible budget is that the static budget is prepared for a single level of activity, while a flexible budget is adjusted for different activity levels. In other words, the static budget remains fixed regardless of changes in activity, while the flexible budget adjusts to changes in activity.

What Is the Primary Difference Between a Static Budget and a Flexible