Asked by Javier Sanmartín Miramontes on May 11, 2024
Verified
Flexible budgeting relies on the assumption that unit variable costs will remain constant within the relevant range of activity.
Flexible Budgeting
A budget that adjusts to changes in activity levels or other factors affecting costs, providing a more accurate comparison to actual results.
Unit Variable Costs
Costs that vary directly with the level of production or output, such as materials and labor, calculated on a per unit basis.
- Ascertain the importance of variable budgets in monitoring and evaluating performance.
Verified Answer
HN
Hoang NguyenMay 13, 2024
Final Answer :
True
Explanation :
Flexible budgeting assumes that unit variable costs will remain constant within the relevant range of activity. This means that the cost per unit will not change based on fluctuations in production or other factors within that range. This assumption allows for more accurate budgeting and forecasting of expenses.
Learning Objectives
- Ascertain the importance of variable budgets in monitoring and evaluating performance.