A budget that budgets costs for the actual number of units produced is called a:
A) master budget.
B) summary cash budget.
C) static budget.
D) flexible budget.

Question

Quizplus · Accepted Answer

A flexible budget is designed to adjust costs based on the actual number of units produced, allowing for greater accuracy in predicting and managing costs. This contrasts with a static budget, which does not adjust for changes in production levels, and is therefore less accurate in predicting and managing costs. A master budget, while important for overall financial planning, does not necessarily have to adjust costs based on production levels. A summary cash budget focuses exclusively on cash flow, and does not necessarily address costs and production levels.

A Budget That Budgets Costs for the Actual Number of Units