Question

Spark Company's static budget is based on a planned activity level of 45,000 units. At the same time the static budget was prepared, the management accountant prepared two additional budgets, one based on 40,000 units and one based on 50,000. The company actually produced and sold 49,000 units. In evaluating its performance, management should compare the company's actual revenues and costs to which of the following budgets?a. A budget based on 40,000 units b. A budget based on 45,000 units c. A budget based on 49,000 units d. A budget based on 50,000 units.

Answer 1

Answer:

c. A budget based on 49,000 units.

Explanation:

Since the company actually sold 49,000 units. In retrospect, when the company is evaluating its performance, management should compare the company's actual revenues and costs to the budget based on 49,000 units to get an accurate assessment of the costs/revenues and income/expenditure during the last period.