A flexible budget:
A)is based on a single assumed level of sales.
B)differentiates the budgeted costs for each sales level.
C)is the budget that is prepared before a static budget.
D)cannot be used for evaluating real-world sales situations.

Question

Quizplus · Accepted Answer

A flexible budget differentiates the budgeted costs for each sales level, allowing for more accurate budgeting and evaluation of performance when actual sales differ from the assumptions made in the original budget. A static budget, on the other hand, is based on a single assumed level of sales and cannot be adjusted to reflect changes in actual sales. Therefore, option A is incorrect. Option C is also incorrect as a flexible budget is prepared after a static budget, to adjust for changes in actual sales levels. Option D is incorrect as a flexible budget is precisely designed to help evaluate real-world sales situations.

A Flexible Budget