If the actual level of activity is 4% more than planned, then the fixed costs in the static budget should be increased by 4% before comparing them to actual costs.

Question

Quizplus · Accepted Answer

Fixed costs in the static budget are unaffected by changes in activity level. Therefore, they should not be adjusted before comparing them to actual costs. Instead, any differences between the actual level of activity and the planned level of activity should be accounted for through flexible budgeting techniques.

If the Actual Level of Activity Is 4% More Than