Which of the following is a difference between a static and a flexible budget?
A) Static budgets use the same fixed cost amounts,whereas flexible budgets change the amount of fixed costs at different levels of activity.
B) Static budgets are based on the same per unit variable amount,whereas flexible budgets are based on multiple per unit variable amounts.
C) Static budgets are based on single estimate of volume,whereas flexible budgets show estimated costs and revenues at a variety of activity levels.
D) None of these answers is correct.

Question

Quizplus · Accepted Answer

A static budget is based on a single estimate of volume, typically the expected level of activity for the budget period. On the other hand, a flexible budget shows estimated costs and revenues at a variety of activity levels, allowing for changes in production or sales levels. Option A is incorrect as it contradicts the definition of a flexible budget. Option B is also incorrect as both static and flexible budgets are based on per unit variable amounts, but the difference lies in how they adjust for changes in activity levels. Option D is incorrect as one of the options is correct.

Which of the Following Is a Difference Between a Static