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 prepared based on a specific level of activity and is not adjusted for changes in actual activity levels. Therefore, it is best used for establishing goals and measuring managerial performance against those goals. Option B refers to a flexible budget, which is adjusted for actual activity levels, and option C refers to variance analysis, which compares actual costs with budgeted costs to assess cost control. Option D is too broad and not specific to the use of a static budget.

A Static Budget Is Best Used to