Budgeted Costs Change Because Total Variable Costs Go Up as Output

question 164

Short Answer

Budgeted costs change because total variable costs go up as output increases, therefore flexible budgets are sometimes referred to as _______________.

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Definitions:

Cash Receipts

The collection of cash during a specific time period, typically from sales or other transactions.

Unearned Revenues

Funds received by a company for goods or services that have not yet been delivered or rendered, considered a liability until the product or service is provided to the customer.

Liabilities

Liabilities that a business must settle in the future, representing the financial debts owed to external parties.

Prepaid Expenses

Costs that have been paid in advance for goods or services to be received in the future.