Static budgets:
I. Are based on specific volumes of products
II. May hide variances caused by operational inefficiencies
III. Do not include fixed costs
A)I and III only
B)II and III only
C)I and II only
D)I, II, and III

Question

Quizplus · Accepted Answer

Static budgets are based on specific volumes of products (I) and may hide variances caused by operational inefficiencies (II) because they do not adjust for changes in activity levels. However, they do include fixed costs, so III is incorrect.

Static Budgets: I. Are Based on Specific Volumes of Products