Question

A flexible budget _____________________ A. presents the plan for only one level of activity and does not adjust to changes in the level of activity. B. drops the current month or quarter and adds a future month or quarter as the current month or quarter is completed. C. allows for variability in the business and for unexpected changes. D. is used when a company is relatively stable.

Answer 1

C. allows for variability in the business and for unexpected changes.

Step-by-step explanation:

A flexible budget allows for variability in the business and for unexpected changes.

A flexible budget varies as per the company´s requirement. The budget is flexible as every company or departments have a different need, and does not remain the same. It calculates different expenditure level for variable costs, depending on changes in actual revenue.

There are several advantages of flexible budget:

• Performance measurement is possible.
• It can be used in a variable cost environment.
• Budget efficiency.