Question

Flexible budgets separate __________ costs from __________ costs; it is the __________ costs that put the "flex" in the flexible budget.

A) Fixed, variable, fixed
B) Variable, fixed, variable
C) Variable, fixed, flexible
D) Fixed, variable, variable

Answer 1

Flexible budgets separate variable costs from fixed costs, with variable costs being the ones that put the 'flex' in the flexible budget.

Step-by-step explanation:

Flexible budgets separate variable costs from fixed costs; it is the variable costs that put the 'flex' in the flexible budget. Variable costs are costs that change proportionally with the level of production, such as direct materials and direct labor. Fixed costs, on the other hand, remain constant regardless of the level of production, such as rent and insurance.