In a flexible budget performance report, actual costs should be compared to the flexible budget at the original budgeted activity level.

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In a flexible budget performance report, actual costs should be compared to the flexible budget at the actual activity level. The flexible budget is recalculated based on the actual level of activity achieved, so the comparison between actual costs and the flexible budget is meaningful. Comparing actual costs to the original budgeted activity level would not account for any variations in activity that occurred during the period.

In a Flexible Budget Performance Report, Actual Costs Should Be