Question

A static budget report is appropriate for

a. fixed manufacturing costs and fixed selling & administrative expenses.
b. fixed manufacturing costs only.
c. fixed selling and administrative expenses only.
d. variable selling and administrative expenses.

Answer 1

Correct option is (a)

Step-by-step explanation:

A budget is a report showing expected expenses and revenue that is prepared before actual period begins. Static budget does not change even if there is any change in production units or expenses. It remains fixed during the period.

It is appropriate for fixed overheads that includes manufacturing, and selling and administrative expenses. This is because fixed overheads remain constant for a considerable period so static report will reflect appropriate results.