Activity flexible budgeting is the prediction of what activity costs will be as related output changes.

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Activity flexible budgeting is based on the idea that there is a relationship between the level of activity (e.g. units produced, hours worked) and the costs involved in that activity. By predicting how costs will change in response to changes in output, managers can use activity flexible budgeting to adjust their plans and make better decisions about resource allocation.

Activity Flexible Budgeting Is the Prediction of What Activity Costs