The Main Difference Between a Flexible Budget and a Static

question 101

True/False

The main difference between a flexible budget and a static budget is that the static budget is not adjusted for changes in the level of activity.

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Definitions:

Predetermined Manufacturing Overhead

An estimated overhead cost calculated before the actual production starts, used in budgeting and setting product prices.

Markup

Markup is the amount added to the cost price of goods to cover overhead and profit, determining the selling price.

Overhead Applied

The portion of estimated overhead cost allocated to each unit of production or activity based on the predetermined overhead rate.

Manufacturing Overhead

Factory-associated indirect expenses that arise during the manufacturing of a product.