A flexible budget is one that:
A)Is revised monthly in the light of changing business conditions.
B)Is a compromise plan reflecting diverse views of various supervisors.
C)Contains estimated cost data for several different levels of activity.
D)Separates factory overhead between the variable and fixed portions.

Question

Quizplus · Accepted Answer

A flexible budget is a budget that adjusts the budgeted amounts for various revenues and expenses based on the actual level of activity. Therefore, it contains estimated cost data for several different levels of activity. Option A is incorrect as a flexible budget is not necessarily revised monthly but is often revised regularly. Option B is incorrect as a flexible budget is not a compromise plan but rather a tool that enables management to adjust budgeted amounts for changing levels of activity. Option D is incorrect as separating factory overhead between the variable and fixed portions is not a defining characteristic of a flexible budget.

A Flexible Budget Is One That