If the volume of output of a factory for the month of June is 50,000 units,while the budgeted output was 40,000 units:
A)Comparison of budgeted results and actual results will be misleading unless the company uses a flexible budget.
B)Actual fixed costs per unit may be expected to exceed budgeted levels.
C)Actual cost per unit will be higher than standard cost per unit.
D)Both total production costs and unit production costs should be approximately 25% above budgeted levels.

Question

Quizplus · Accepted Answer

Without a flexible budget, it would be difficult to accurately compare budgeted results to actual results, as the factory produced 25% more output than budgeted. A flexible budget takes into account changes in activity levels, such as production volume, and adjusts the budgeted amounts accordingly. This would allow for a more accurate comparison of budgeted and actual results. The other options are not necessarily true based on the information given.

If the Volume of Output of a Factory for the Month