COST ACCOUNTING
FLEXIBLE BUDGETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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sales volume from Actual results and unit price/unit expense from the static (master) budget
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sales volume from flex budget and unit price/unit expense from the static (master) budget
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sales volume from Actual results and unit price/unit expense from the flex budget
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Detailed explanation-1: -In a flexible budget, there is no comparison of budgeted to actual revenues, since the two numbers are the same. The model is designed to match actual expenses to expected expenses, not to compare revenue levels.
Detailed explanation-2: -Flexible, rolling budgets empower entrepreneurs to cope with change. This nimble planning process lets you adjust spending throughout the year; benefits include less overspending, more opportunities and speedier responses to changing market and business conditions.
Detailed explanation-3: -A flexible budget is a budget that adjusts to a company’s activity or volume levels. Unlike a static budget, which doesn’t change from the amounts established when the company creates the budget, a flexible budget continuously changes with a business’ cost variations.
Detailed explanation-4: -Sales volume is the quantity of merchandise or services a company sells over a specific period of time. Flexible budgets are developed using actual sales revenue figures and actual operating expense figures.