Question

In a flexible budget, __________ are adjusted to reflect actual performance.

Select one:

a. fixed costs

b. variable costs

c. revenues

d. All of the above.

e. Only b) and c).

Answer 1

Correct answer is option e = only b and c

In a flexible budget, revenues and variable cost are adjusted to reflect actual performance.

Explanation :

In a flexible budget , adjustments are made for the changes in volume , any increase or decrease in sales volume is adjusted in revenues and variable cost are also adjusted for the same.

Flexible budget is also called variable cost budget.

Thus option e is correct.

Fixed cost ar not affected by the change in levels of output or sales volume. Thus fixed cost is not adjusted in flexible budget.

Thus option a and d are incorrect.

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