A flexible budget is most useful
A)when company has only fixed costs.
B)when actual output equals budgeted output.
C)as a cost control tool to help evaluate performance.
D)when a product's cost structure includes variable costs only.

Question

Quizplus · Accepted Answer

A flexible budget is most useful as a cost control tool to evaluate performance because it allows for adjustments in the budgeted amounts based on changes in activity levels. This is especially important when dealing with variable costs that can fluctuate based on levels of production or sales. It provides a more accurate picture of expected costs and allows for better comparison to actual results, aiding in the identification of areas where cost savings may be possible.

A Flexible Budget Is Most Useful