Question

Directly comparing a static planning budget to actual costs helps to distinguish between differences in costs that are due to changes in activity and differences that are due to how well costs were controlled.

a. True
b. False

Answer 1

The correct answer is the option A: True.

Step-by-step explanation:

To begin with, the name of "Static Planning Budget" refers to a type of budget that is used by the companies who need to keep the track of the information regarding the costs of the production and much more. The principal characteristic of this type of budget is that, as its name says, it stays static during the whole production, no matter what changes truly happen during the process. Therefore that this budget focus on keeping everything going as planned and not chaning anything. That is why that directly comparing it with the real costs will help to see the differences that happended because of the changes in activity and how well the costs were controlled by the company.