A flexible budget performance report should contain fixed as well as variable and mixed costs.

Question

Quizplus · Accepted Answer

A flexible budget accounts for changes in activity levels, and therefore should contain fixed costs (which do not change with activity levels), as well as variable and mixed costs (which do change with activity levels). Including all three types of costs in the performance report allows for a more accurate assessment of how well the organization is performing in relation to its budgeted expectations.

A Flexible Budget Performance Report Should Contain Fixed as Well