Flexible budgeting relies on the assumption that unit fixed costs will remain constant within the relevant range of activity.

Question

Quizplus · Accepted Answer

Flexible budgeting assumes that unit variable costs will remain constant within the relevant range of activity, but unit fixed costs can vary depending on the level of activity. Therefore, flexible budgeting takes into account the possibility of changes in fixed costs as the level of activity changes.

Flexible Budgeting Relies on the Assumption That Unit Fixed Costs