Final answer:
Flexible budgets reflect a company's anticipated costs based on variations in a. activity levels. They provide a more accurate estimate of costs as activity levels change.
Step-by-step explanation:
Flexible budgets reflect a company's anticipated costs based on variations in a. activity levels. They are designed to adjust for changes in the level of activity or production and provide a more accurate estimate of costs.
For example, if a company expects to produce more units, the flexible budget will reflect the increased costs associated with higher production levels. On the other hand, if the company expects lower production levels, the flexible budget will adjust accordingly to reflect the reduced costs.
Overall, flexible budgets help companies plan and make informed decisions by providing a clearer picture of how costs vary with changes in activity levels.