CIMA BA2 · Chapter 6 · Question 7 of 13
What is a FLEXIBLE budget?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) A budget that is designed to change in line with the actual level of activity, by recognising cost behaviour
Explanation
A flexible budget recognises which costs are fixed and which vary with activity, so it can be flexed to the actual output achieved. This allows a meaningful comparison of actual costs with the costs that should have been incurred at that level of activity. Adding a new period describes a rolling budget.
More Budgeting MCQs
- Q9Which budgeting approach requires every activity and its costs to be justified from a base of zero, as if the activity were being…
- Q10Budgetary slack (padding) is most likely to arise in which of the following situations?
- Q11What is a ROLLING (continuous) budget?
- Q12Which of the following make up the MASTER budget?
- Q13Which of the following items would NOT appear in a cash budget?