What is characteristic of a before-the-fact flexible budget?
A) It is used for performance reports.
B) It is used to compare expected costs with actual costs.
C) It calculates expected costs for various levels of activity.
D) It calculates what costs should have been for the actual level of activity.

Question

Quizplus · Accepted Answer

A before-the-fact flexible budget calculates expected costs based on various levels of activity, allowing for adjustments in the budget as the level of activity changes. This allows for better planning and control of costs based on expected changes in activity. Option A is incorrect as a before-the-fact flexible budget is not used for performance reporting. Option B is incorrect as it relates to a after-the-fact flexible budget. Option D is incorrect as it does not calculate expected costs, but rather evaluates actual costs against a predetermined budget.

What Is Characteristic of a Before-The-Fact Flexible Budget