Which of the following is true of a flexible budget?
A) It is prepared by large firms only.
B) It is used to measure whether or not a manager accomplishes his or her goals.
C) It is usually not a good choice for benchmarks while preparing a performance report.
D) It is a budget created in advance that is based on a particular level of activity.
E) It enables a firm to compute expected costs for a range of activity levels.

Question

Quizplus · Accepted Answer

A flexible budget is a budget created in advance that is based on a particular level of activity. However, it enables a firm to compute expected costs for a range of activity levels. Therefore, it is a good choice for benchmarks while preparing a performance report. It can be used to measure whether or not a manager accomplishes his or her goals. Flexible budgets are used by both large and small firms.

Which of the Following Is True of a Flexible Budget