Question

Which of the following is NOT true regarding static and flexible budgeting? a. Performance budgets are adjusted for changes in volume b. Static budgets force managers to be responsible for volume fluctuations c. Static budgets vary with volume d. Flexible budgets are better than static budgets for determining the actual performance of a person or venture after controlling for volume effects.

Answer 1

Answer:

b. Static budgets force managers to be responsible for volume fluctuations

Explanation:

A flexible budget is one that is allowed to adjust based on a change in the assumptions used to create the budget during management's planning process.

A static budget, on the other hand, remains the same even if there are significant changes from the assumptions made during planning.