Question

A static planning budget

A) compares actual revenues at one level of activity with budgeted costs at the same level of activity
B) compares actual revenues at one level of activity with budgeted revenues at the same level of activity
C) compares actual costs at one level of activity with budgeted costs at a different level of activity
D) compares actual revenues at one level of activity with budgeted revenues at a different level of activity

Answer 1

C and D

Step-by-step explanation:

In preparing a static budget, managers use predicted values for inputs and outputs. The anticipated prices are adopted at the beginning of the accounting period. A static budget is a forecast of the expected revenues and expenses of an organization over a specified period. The prices used in a static budget remain unchanged regardless of market fluctuations. Static budgets are also called fixed budgets

At the end of a period, the actual numbers realized may be quite different from the figures in a static budgeted. Managers use static budgets to target the level of expenses, costs, and revenues. Governments departments and non-profit organizations use static budgets as their incomes are unlikely to change throughout a period.

Management compares the actual results at the end of a period, and the budgeted numbers at the beginning to measure perfomance or achievement. The comparison is for both revenues and expenditures.