In a chain of discount department stores, personnel needs are estimated in three different ways: (a) for a high demand season, (b) for a moderate demand season, and (c) for a slack season. By taking these three activity levels into account, managers are developing a ___.
A) fixed budget
B) flexible budget
C) zero-based budget
D) standing-use plan
E) policy

Question

Quizplus · Accepted Answer

Since the personnel needs are estimated for three different activity levels, a flexible budget would be the most appropriate choice. A flexible budget adjusts to changes in activity levels and is suited for businesses that experience fluctuations in demand. A fixed budget would not be appropriate in this situation since it does not account for changes in activity levels, and a zero-based budget typically starts from scratch and does not consider historical activity levels. A standing-use plan is a set of instructions for recurring events and does not account for changes in demand. A policy is a set of guidelines or rules, but it is not directly related to budgeting.

In a Chain of Discount Department Stores, Personnel Needs Are