What Is the Primary Difference Between a Static Budget and a Flexible

question 51

Multiple Choice

What is the primary difference between a static budget and a flexible budget?

• A) The static budget contains only fixed costs while the flexible budget contains only variable costs.
• B) The static budget is prepared for a single level of activity while a flexible budget is adjusted for different activity levels.
• C) The static budget is constructed using input from only upper level management while a flexible budget obtains input from all levels of management.
• D) The static budget is prepared only for units produced while a flexible budget reflects the number of units sold.

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Definitions:

Consumer Surplus

The discrepancy between the financial amount consumers intend to spend on a good or service and the amount they end up spending.

Peanuts

A legume crop grown mainly for its edible seeds, which are high in protein, fat, and various healthy nutrients.

Firm's Willingness

Firm's willingness refers to a company's readiness or inclination to engage in certain activities, such as investing, producing, or changing pricing strategies, based on expected outcomes.

Producer Surplus

The difference between the market price for a good or service and the lowest price at which producers would still sell it.