An Activity-Based Flexible Budget Differs from a Conventional Flexible Budget

question 60

Multiple Choice

An activity-based flexible budget differs from a conventional flexible budget in that:

• A)the flexible budget is the better basis to use for cost management purposes.
• B)the activity-based costing approach is more accurate because costs that were categorized as fixed on the conventional flexible budget become variable when multiple cost drivers are used.
• C)the conventional flexible budget approach is more accurate because costs are classified as variable with respect to a single, appropriately chosen cost driver.
• D)the conventional budget approach provides a richer view of cost behaviour.
• E)the conventional approach is the most widely used by management accountants.

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Definitions:

Unearned Rent Revenue

Income received by a landlord for rent that has been paid in advance but is not yet earned as the period has not occurred.

Unearned Revenue

Money received by a company for goods or services yet to be delivered or performed, recognized as a liability.

Season Tickets

Prepaid tickets allowing entry to a series of events, typically for sports or theatrical seasons, offering a discount over purchasing individually.

Magazine Subscriptions

Recurring payments made by the readers to receive periodic publications over a specific period of time.