Final answer:
A static budget(option A) is designed for a single level of sales volume and does not vary even when actual sales do. Such a budget is used primarily for performance evaluations by providing a constant benchmark, despite potential limitations in a fluctuating business environment.
Step-by-step explanation:
A static budget is a budget prepared for only one level of sales volume. This type of budget is established for a fixed level of activity and does not change or flex when actual sales volumes or revenues differ from the initial projections.
Often contrasted with a flexible budget, which adjusts based on changes in the volume of activity, a static budget provides a fixed framework for performance evaluation and can be quite valuable for comparison purposes.
It is designed chiefly for control purposes, setting a clear benchmark against which actual results can be compared. Despite its benefits, a static budget can have limitations, especially in a dynamic business environment where sales volumes fluctuate regularly and unpredictability is a factor.