ACCA MA · Chapter 10 · Question 7 of 11
What is a flexible budget?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) A budget that is adjusted to reflect the actual level of activity, by recognising how costs behave
Explanation
A flexible budget recognises cost behaviour, so variable costs change with activity while fixed costs stay the same. Comparing actual results with a budget flexed to the actual activity level gives more meaningful variances for control. A fixed budget is set for one activity level only.
More Budgeting MCQs
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