In preparing flexible budgets, the first step is to identify the fixed and variable components of the various costs and expenses being budgeted.

Name: In preparing flexible budgets, the first step is to identify the fixed and variable components of the various costs and expenses being budgeted.
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This statement is correct. In order to prepare a flexible budget, it is important to differentiate between fixed and variable costs and expenses as they will react differently to changes in activity levels.

In Preparing Flexible Budgets, the First Step Is to Identify