A static planning budget is suitable for planning but is inappropriate for evaluating how well costs are controlled.

Question

Quizplus · Accepted Answer

A static planning budget is prepared in advance and does not reflect any changes in actual costs or revenues. Therefore, it cannot be used to evaluate how well costs are controlled, as it does not take into account any variances between actual and budgeted costs. Instead, a flexible budget should be used for evaluation purposes, as it adjusts the budget based on actual levels of activity or revenue.

A Static Planning Budget Is Suitable for Planning but Is