37 The purpose of a flexible budget is to *O Allow management some latitude in meeting goalsO Eliminate cyclical fluctuations in production reports by ignoring variable costsO Compare actual and budgeted results at virtually any level of productionO Reduce the total time in preparing the annual budget

Flexible budgets are made from the static budgets. Static budget is made for a certain level of…

Answered: The purpose of a flexible budget is to…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 1CMA: When compared to static budgets, flexible budgets: a. offer managers a more realistic comparison of...

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Similar questions

Why might a rolling budget require more management participation than an annual budget?
Which of the following is true in a bottom-up budgeting approach? Every expense needs to be justified. Supervisors tell departments their budget amount and the departments are free to work within those amounts. Departments budget their needs however they see fit. Departments determine their needs and relate them to the overall goals.
Fill in the blanks: A flexible budget summarizes _____ and _____ for various volume levels by adjusting the _____ costs for the various levels of activities. The costs remain the same for all levels of activities.
Define static budget. Give an example that shows how reliance on a static budget could mislead management.
Explain why mixed costs must be broken down into their fixed and variable components before a flexible budget can be developed.
A static budget is most useful for evaluating a manager's performance in controlling variable costs. O a. True O b. False
A flexible budget depicted graphically O differs from a CVP graph in that sales revenue is not shown. differs from a CVP graph in the way that fixed costs are shown. O is identical to a CVP graph. O differs from a CVP graph in the way that variable costs are shown.
1.Using a flexible budget, actual results can be compared to what costs should have been at the actual level of activity. True or False 2.Fixed costs should not be included in a flexible budget because they do not change when the level of activity changes. True or False 3.Actual costs are determined by plugging the actual level of activity for the period into the cost formulas used in flexible budgets. True or False 4.If activity is higher than expected, total fixed costs should be higher than expected. If activity is lower than expected, total fixed costs should be lower than expected. True or False
Management Accounting Question (Qualitative Short Answer) a. Why is the sales forecast the starting point in budgeting? b. What is a perpetual budget? c. Which is a better basis for evaluating actual results: budgeted performance or past performance? Why? d. The materials price variance can be computed at what two different points in time? Which point is better and why? e. What effect, if any, would you expect purchasing poor-quality materials to have on direct labor variances? f. Distinguish between ideal and practical standards. g. Costs associated with the quality of conformance can be broken down into four broad groups. What are these four groups and how do they differ? h. What is likely the most effective way to reduce a company's total quality costs? i. What are the three main uses of quality cost reports?
Question: What is the purpose of a flexible budget? a) To control costs and evaluate performance b) To prepare financial statements for external reporting c) To forecast long-term strategic goals d) To allocate overhead costs
In a flexible budget, what will happen to fixed costs as the activity level increases? Multiple Choice The fixed cost per unit will decrease. The fixed cost per unit will increase. Fixed costs are not included in a flexible budget.
Activity flexible budgeting differs from traditional approaches by using more than ____________ drivers to predict costs.

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