A performance report
A) always uses static budgets.
B) compares actual costs with budgeted costs.
C) uses a static or a flexible budget.
D) both compares actual costs with budgeted costs and always uses static budget.
E) both always uses static budgets and usually uses flexible budgets.

Question

Quizplus · Accepted Answer

A performance report compares actual costs with budgeted costs to evaluate the effectiveness of decisions made and identify areas for improvement. It does not always use static budgets, as it can use a flexible budget that adjusts to changes in activity levels. Therefore, option A and E are eliminated. Option D incorrectly suggests that a performance report always uses a static budget, which is not true. Thus, the correct answer is B, which implies that the report compares actual costs with budgeted ones.

A Performance Report