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:

Appreciation

Appreciation refers to the increase in value of an asset over time, often due to changes in market demand or economic conditions.

Capital Gains

The profit made from selling an asset at a higher price than its purchase price.

Payout Ratio

A financial metric that shows the percentage of a company's earnings paid to shareholders as dividends.

Dividends

Payments made by a corporation to its shareholder members, often derived from the company's profits.