Summer Company's static budget is based on a planned activity level of 25,000 units. Later, the company's management accountant prepared a budget based on 30,000 units. The company actually produced and sold 29,000 units. In evaluating its performance, management should compare the company's actual revenues and costs to which of the following budgets?
A) A budget based on 29,000 units
B) A budget based on 30,000 units
C) A budget based on 25,000 units
D) Either a budget based on 29,000 units or a budget based on 25,000 units

Question

Quizplus · Accepted Answer

Management should compare actual performance to a flexible budget based on the actual activity level of 29,000 units to accurately assess performance.

Summer Company's Static Budget Is Based on a Planned Activity