If the budgeted activity level is greater than the actual activity level, then the total budgeted costs of the master budget will be greater than the total budgeted costs of the flexible budget.

Question

Quizplus · Accepted Answer

The master budget is based on the budgeted activity level, while the flexible budget adjusts for the actual activity level. If the budgeted activity level is greater, the master budget will reflect higher costs than the flexible budget, which accounts for the lower actual activity.

If the Budgeted Activity Level Is Greater Than the Actual