Flexible budgets require greater manager diligence and response to changes in output to ensure actual expenditures are less than or equal to the end-of-period, restated budget.

Question

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Flexible budgets adjust for changes in output levels, requiring managers to actively monitor and control costs to align with the revised budget, ensuring expenditures do not exceed the budgeted amounts.

Flexible Budgets Require Greater Manager Diligence and Response to Changes