A static budget is best used to
A) measure whether or not a manager accomplishes his or her goals.
B) compare expected costs at the actual level of activity with the actual costs.
C) assess how well costs were controlled during the year.
D) determine managerial efficiency.
E) None of these.

Question

Quizplus · Accepted Answer

A static budget is a budget that remains unchanged regardless of the actual level of activity. Therefore, it is best used to measure whether or not a manager accomplishes his or her goals. It cannot be used to compare expected costs at the actual level of activity with the actual costs or assess how well costs were controlled during the year because it does not account for changes in activity. It also cannot determine managerial efficiency because it does not consider actual results.

A Static Budget Is Best Used to