COST ACCOUNTING
FLEXIBLE BUDGETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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a budget for a single level of activity.
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a budget that ignores inflation.
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used only for fixed costs.
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used when the mix of products does not change
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Detailed explanation-1: -A static budget is one that is prepared based on a single level of output for a given period. The master budget, and all the budgets included in the master budget, are examples of static budgets. Actual results are compared to the static budget numbers as one means to evaluate company performance.
Detailed explanation-2: -Static budget is the one which is prepared for only one expected level of activity.
Detailed explanation-3: -What Is a Static Budget? A static budget is a budget that uses predicted amounts for a given period prior to the period beginning. The unique aspect of a static budget is that it does not change regardless of deviations in revenue and expenses.
Detailed explanation-4: -A static budget can be defined as the kind of budget that anticipates all revenue and expenses over a particular period in advance. Here changes in the level of production/ sales or any other major factor do not affect the budgeted data, and hence it is also called a fixed budget.