ECONOMICS
MONEY MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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should not need to be re-evaluated once it is in place.
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should never show any variances.
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should be flexible.
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should reflect current and future income.
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Detailed explanation-1: -Flexible budgets are essentially budgets that can be adjusted depending upon revenue and cost changes throughout the fiscal year, accounting for expected unpredictability.
Detailed explanation-2: -As complex or as simple as management needs For a small, simple business a static budget may be appropriate. However, for larger and more complex businesses the use of a flexible budget is essential.
Detailed explanation-3: -A budget that will be changed at the end of every month in order to reflect the actual costs of a department.
Detailed explanation-4: -The correct answer is *a) Consists of estimates of costs and expenses for various possible levels of activity. Flexible budgets are accounting tools that calculate different expenditure levels for variable costs, depending upon changes in actual revenue.
Detailed explanation-5: -Flexible budgets are prepared at the end of each analysis period (usually monthly), rather than in advance, since the idea is to compare the operating income to the expenses deemed appropriate at the actual production level.