Static and flexible budgets are similar in that:Multiple ChoiceThey both are based on the same per unit variable amounts and the same fixed costsThey both concentrate solely on costs.They both are prepared for multiple activity levels.None of these answers is correct.

Both Static and Flexible budgets are prepared on the basis of per unit variable amount and same…

Answered: Static and flexible budgets are similar…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 1CMA: When compared to static budgets, flexible budgets: a. offer managers a more realistic comparison of...

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Similar questions

Explain why mixed costs must be broken down into their fixed and variable components before a flexible budget can be developed.
What is the main difference between static and flexible budgets? The fixed manufacturing overhead is adjusted for units sold in the flexible budget. The variable manufacturing overhead is adjusted in the static budget. There is no difference between the budgets. The variable costs are adjusted in a flexible budget.
Which ONE of the following is true? a. Assume all costs are fixed when creating a flexible budget b. None of the other available answers are true c. There can only be one cost driver d. Unfavorable activity variances for costs will typically accompany a favorable activity variance for revenue. e. Variances are classified according to the impact on revenue f. Assume all costs are variable when creating a flexible budget
What is the primary difference between a static budget and a flexible budget? a. The static budget contains only fixed costs, while the flexible budget contains only variable costs. b. The static budget is prepared for a single level of activity, while a flexible budget is adjusted for different activity levels. c. The static budget is constructed using input from only upper level management, while a flexible budget obtains input from all levels of management. d. The static budget is prepared only for units produced, while a flexible budget reflects the number of units sold.
A flexible budget is a series of static budgets at different levels of activities. Select one: True False
In comparison to static budgets, flexible budgets: Offer managers a more realistic comparison of budget and actual fixed cost items under their control Encourage managers to use fewer fixed cost items and more variable cost items that are under their control. Provide a better understanding of the capacity variances during the period being evaluated. Offer managers a more realistic comparison of budget and actual revenue and cost items under their control.
An advantage of the flexible budget over the static budget is: Group of answer choices Flexible budget can be prepared based on the sales volume of the previous period. Flexible budget provides better comparison as it can be prepared based on the actual level of sales volume. Preparation of flexible budget is relatively less time consuming. Flexible budget requires less data.
Please correct me if I am wrong and give the reason thoroughly. When using a flexible budget, a decrease in activity within the relevant range: A) decreases variable cost per unit. B) increases the variable cost per unit. C) decreases total costs. D) increases total costs. The correct answer is (C). My understanding that (within the relevant range) the variable cost is constant and Fixed cost is variable, which means it decreases if the level of activity decreased and vice versa when the level of activity increased. Therefore, the total cost decreases when the total activity within the range decreased.
Which of the following statement is true? Multiple Choice The performance evaluation of a cost center is typically based on the static budget variance. static budget is constructed using standard costs while the flexible budget uses a zero-based approach. static budget is more useful for performance measurement purposes. static budget is used in the service industry while flexible budget is used for manufacturing sector only. static budget is prepared for a single level of activity while a flexible budget can be flexed for different activity levels.
In a flexible budget, what will happen to fixed costs as the activity level increases? Multiple Choice The fixed cost per unit will decrease. The fixed cost per unit will increase. Fixed costs are not included in a flexible budget.
Which statements regarding flexible budgeting are true? Multiple select question. It involves variable cost items such as direct materials, direct labor, and variable manufacturing overhead. It is done by multiplying the variable cost per unit of each variable cost item by the actual activity level. The budget allowance for variable costs should be flexed to show the costs that should have been incurred for the actual level of activity. Flexible budgeting should include an adjustment to the fixed overhead budget. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Comparing a static planning budget to actual costs is not a good way to assess whether variable costs are under control. True or False In a flexible budget, when the activity declines, the total variable cost also declines. True or False The main difference between a flexible budget and a static budget is that the static budget is not adjusted for changes in the level of activity. True or False To help assess how well a manager has controlled costs, actual costs should be compared to what the costs should have been for the actual level of activity. True or False Fixed costs should usually be included in performance reports because fixed costs are generally controllable. True or False

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Static and flexible budgets are similar in that: Multiple Choice They both are based on the same per unit variable amounts and the same fixed costs They both concentrate solely on costs. They both are prepared for multiple activity levels. None of these answers is correct.