ECONOMICS

Detailed explanation-1: -No, fixed costs should be included in a flexible budget even if they are not controllable costs. A flexible budget has complete information related to fixed costs.

Detailed explanation-2: -Fixed costs should not be included in a flexible budget because they do not change when the level of activity changes. Actual costs are determined by plugging the actual level of activity for the period into the cost formulas used in flexible budgets.

Detailed explanation-3: -Fixed costs per unit will decrease. As we know, the total fixed costs remain the same within a relevant activity range. So if the activity level increases and the fixed expenses remain the same, the per-unit cost will decrease.

Detailed explanation-4: -The flexible budget will show different possibilities for variable expenses and revenue. Variable costs can include marketing and sales, and may also include the cost of materials, number of sales, and shipping costs. A flexible budget will include lines for different amounts.

Detailed explanation-5: -Fixed costs should not be ignored when evaluating how well a manager has controlled costs. If the actual level of activity is 4% more than planned, then the costs in the static budget should be increased by 4% before comparing them to actual costs.