Question

A flexible budget is:

Group of answer choices

A budget of semi-variable production costs only.

Less suitable compared to a static budget when it comes to setting standards.

Good for management flexibility in terms of meeting budget goals.

A budget that is constructed at the same time as the static budget

The same as a static budget with respect to its variable cost per unit of output

Answer 1

Sol: Option - C - Good for management flexibility in terms of meeting budget goals.

An Overview of Flexible Budget :-
Before discussing we need to know, what is Static Budget?
Static Budget - It's a budget that is prepared at the beginning of the year and not changed until it's time to make a new one at the start of the next year.It is used for planning purposes, hence also known as Planning budget.The level of activity & numbers used here don't change, it is based on a projected level of activity.

A Flexible budget, on the other hand, is a series of budgets prepared for various levels of activities, revenues and expenses. This budget adjusts or flexes with changes in volume or activity.It is used to bridge the gap between planning budget and actual performance and to isolate each difference, a flexible budget is prepared based on the actual level of activity and the revenue and cost formulas from the planning budget.The flexible budget is more sophisticated and useful than a static budget.
At last we can conclude that, the flexible budget is a more useful tool when measuring a manager's efficiency.