CIMA BA2 · Chapter 8 · Question 9 of 9
For cost control purposes, a department's actual costs for a period should be compared with which of the following?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) A budget flexed to the actual level of activity achieved
Explanation
If activity differs from the original plan, comparing actual costs with a fixed budget mixes the effect of volume with the effect of efficiency and spending. Flexing the budget to actual activity shows what costs should have been at that output, giving meaningful variances for control.
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