Variances for variable costs will be misleading when the planned output differs from budgeted output.A solution to this problem would be
A)to use a stricter budgeting process.
B)to use flexible budgeting.
C)to better predict the final output.
D)to allow more judgement involve in the budgeting process.

Question

Quizplus · Accepted Answer

To overcome the problem of misleading variances for variable costs when the planned output differs from budgeted output, flexible budgeting should be used. Flexible budgeting allows for adjustments to be made to the budget based on actual output achieved, providing a more accurate reflection of the cost variances that occur. This contrasts with a static budget, which remains fixed regardless of changes in output, ultimately leading to misleading variances. Therefore, the best choice in this case would be to use flexible budgeting.

Variances for Variable Costs Will Be Misleading When the Planned