By using a static budget, changes in activity level cannot cause any variances between the flexible budget and actual results.

Question

Quizplus · Accepted Answer

A static budget does not adjust to changes in activity level, therefore variances can occur between the budgeted amounts and actual results. A flexible budget, on the other hand, is designed to adjust to changes in activity level and provides a more accurate reflection of expected costs at different levels of production or sales.

By Using a Static Budget, Changes in Activity Level Cannot