The primary difference between a static budget and a flexible budget is that a static budget
A)is suitable in a volatile demand situation while a flexible budget is suitable in a stable demand situation
B)is concerned only with future acquisitions of fixed assets, whereas a flexible budget is concerned with expenses that vary with sales
C)includes only fixed costs, whereas a flexible budget includes only variable costs
D)is a plan for a single level of activity, whereas a flexible budget adjusts for changes in the activity level

Question

Quizplus · Accepted Answer

A static budget is prepared for a single level of activity and does not change even if the actual level of activity changes. In contrast, a flexible budget adjusts based on the actual level of activity, making it more useful for controlling costs and evaluating performance.

The Primary Difference Between a Static Budget and a Flexible