Question

A budget based on several different levels of activity, often including both a best-case and worst-case scenario, is called a: Multiple Choice Flexible budget. Rolling budget. Merchandise purchases budget. Production budget. Fixed budget.

Answer 1

Answer: Flexible budget

Explanation: flexible budget are flexible in nature, that is they are capable of being adapted or molded in some way with changes in volume or activity. It contains budget of various level of activities often including both a best-case and worst-case scenario. All the several different levels are then represented comparatively, showing the whole budget of each level. This means that it reflects the expenditure appropriate to various levels of activity and therefore is more suitable for comparison of the actual expenditure incurred with the budgeted level applicable for every level of activity attained.

Answer 2

Flexible budget

Step-by-step explanation:

A flexible budget is that which is prepared for different levels of activity using the assumptions or parameters contained in a fixed budget. For example, if it is assumed that the variable cost per unit is $6, a business might prepare budgets for let say , 4,000 units, 5,000 units 6,000 units showing the expected revenue, expenditure and profit for these different scenarios. Such budget is referred to as flexible budget.

Unlike fixed budgets which are used for planning purpose and always prepared for just a single level of activity, flexible budgets are prepared to vary to meet the a business need.