A static budget:
A)is based totally on prior year's costs.
B)is based on one anticipated activity level.
C)is based on a range of activity.
D)is preferred over a ﬂexible budget in the evaluation of performance.
E)presents a clear measure of performance when planned activity differs from actual activity.

Question

Quizplus · Accepted Answer

A static budget is based on one anticipated activity level, whereas a flexible budget is based on a range of activity. A static budget is not as useful in evaluating performance because it does not account for differences between planned and actual activity levels. Therefore, a flexible budget is preferred.

A Static Budget