Which of the following is characteristic of a before-the-fact flexible budget?
A)It calculates expected costs for various levels of activity.
B)It is used for performance reports.
C)It calculates what costs should have been for the actual level of activity.
D)It is used to compare expected costs with actual costs.

Question

Quizplus · Accepted Answer

A before-the-fact flexible budget calculates expected costs for various levels of activity before actual activity occurs. It is used to help management plan and control costs by allowing them to see how costs will be affected by changes in activity levels. This type of budget is different from an after-the-fact flexible budget, which calculates what costs should have been for the actual level of activity that occurred. Performance reports would typically use an after-the-fact flexible budget to compare expected costs with actual costs.

Which of the Following Is Characteristic of a Before-The-Fact Flexible