With regard to a static budget instead of a flexible budget, which of the following is true?
A)A static budget is adjusted for changes in the level of sales activity.
B)A static budget is a budget that stays the same from one period to the next.
C)A static budget is prepared for only one level of sales activity.
D)A static budget is also known as a fixed budget.

Question

Quizplus · Accepted Answer

A static budget is prepared for only one level of sales activity and does not adjust for changes in activity levels. Option A is incorrect because a flexible budget is adjusted for changes in the level of sales activity. Option B is incorrect because a budget that stays the same from one period to the next is known as a rollover budget. Option D is partially correct because a static budget is also known as a fixed budget, but it is not the only term used to refer to it.

With Regard to a Static Budget Instead of a Flexible