Question

8. The purpose of a flexible budget is to: A. remove items from performance reports that are not controllable by managers. B. permit managers to reduce the number of unfavorable variances that are reported. C. update the static planning budget to reflect the actual level of activity of the period. D. reduce the amount of conflict between departments when the master budget is prepared.

Answer 1

Answer:

C. update the static planning budget to reflect the actual level of activity of the period.

Explanation:

A flexible budget can be used to determine what costs should have been at a given level of activity.

A flexible budget is a budget that adjusts or flexes with changes in volume or activity. They remain unchanged from the amounts established at the time that the static budget was prepared and approved.

Flexible budget is a budget that is mostly used as a static budget and basically changes with the changes occurring in the volume or activity held in production, also helpful for increasing the manager's efficiency and effectiveness because it is set to benchmark for the actual performance of the company.