Question

Given the budgeted and actual information for XYZ Ltd, what is the correct sequence of preparing the cost statement?

a) Actual results, Flexed budget, Original budget

b) Original budget, Actual results, Flexed budget

c) Flexed budget, Actual results, Original budget

d) Original budget, Flexed budget, Actual results

Answer 1

The correct sequence of preparing the cost statement is d) Original budget, Flexed budget, Actual results.

Step-by-step explanation:

The correct sequence of preparing the cost statement is d) Original budget, Flexed budget, Actual results. This sequence starts with the original budget, which is the planned expenditure for the period. Then, the flexed budget is prepared by adjusting the original budget for changes in activity levels. Finally, the actual results are compared to the flexed budget to analyze the variances.