Asked by Malaisha Easter on May 13, 2024
Verified
A static budget is most useful for evaluating a manager's performance in controlling variable costs.
Static Budget
A financial plan that does not change or adjust over the period, even when there are significant changes in the levels of activity.
Variable Costs
Expenses that change in proportion to the level of activity or production volume.
- Contrast static and flexible budgets, focusing on their roles in cost control.
Verified Answer
YI
Yahiya Ibrahim HaidaraMay 16, 2024
Final Answer :
False
Explanation :
A static budget is based on fixed assumptions and does not reflect changes in variable costs. Therefore, it is not useful for evaluating a manager's performance in controlling variable costs. Instead, a flexible budget is more appropriate for such evaluation as it adjusts for changes in volume and variable costs.
Learning Objectives
- Contrast static and flexible budgets, focusing on their roles in cost control.