Asked by Alanis Matthews on Jun 24, 2024

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The activity index used in preparing a flexible budget should not influence the variable costs that are being budgeted.

Activity Index

The activity that causes changes in the behavior of costs.

Variable Costs

Costs that vary directly with the level of production or service output, such as materials and labor.

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Verified Answer

RT
Ribaraoi TekieraJun 29, 2024
Final Answer :
False
Explanation :
The activity index (or base) directly influences variable costs in a flexible budget, as these costs are expected to change in proportion to changes in the level of activity.