Question

A static budget is appropriate in evaluating a manager's performance if

actual activity closely approximates the master budget activity.
actual activity is less than the master budget activity.
the company is a not-for-profit organization.
the company prepares reports on an annual basis.

Answer 1

The correct answer is letter "A": actual activity closely approximates the master budget activity.

Step-by-step explanation:

A static budget includes projected values of inputs and outputs conceived before a company period begins. It estimates revenue and expenditure over a particular period which keeps the same with changes in business activity. It is also a helpful tool that allows rating the manager's performance by checking if the goals set in the master budget are being accomplished or not.