For cost control purposes,actual costs should be compared to
A)the original budget.
B)actual costs for the prior period.
C)a flexible budget.
D)a static budget.

Question

Quizplus · Accepted Answer

Actual costs should be compared to a flexible budget, which adjusts for changes in activity levels. A static budget is not as useful because it does not reflect changes in activity levels. The original budget may also not be useful for cost control purposes if it did not accurately reflect the actual activity levels. Comparing actual costs to prior period costs may provide some insight into trends, but it does not account for changes in activity levels or any other factors that could affect costs. Therefore, the best choice is to compare actual costs to a flexible budget.

For Cost Control Purposes,actual Costs Should Be Compared to