Directly comparing a static planning budget to actual costs helps to distinguish between differences in costs that are due to changes in activity and differences that are due to how well costs were controlled.

Question

Quizplus · Accepted Answer

A static planning budget does not account for changes in activity levels, so it cannot distinguish between cost differences due to activity changes and cost control effectiveness. A flexible budget is needed for such analysis.

Directly Comparing a Static Planning Budget to Actual Costs Helps