Activity Flexible Budgeting Provides a More Accurate Prediction of Costs

question 88

Multiple Choice

Activity flexible budgeting provides a more accurate prediction of costs than a traditional flexible budgeting approach because

• A) costs often vary with more than one driver.
• B) nonunit level drivers are often not highly correlated with direct labor hours.
• C) direct labor hours are often not measured correctly.
• D) costs often vary with more than one driver and nonunit level drivers are often not highly correlated with direct labor hours.
• E) costs often vary with more than one driver and direct labor hours are not correct.

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Definitions:

Restraining Forces

Forces that counteract change in an organization by maintaining the status quo.

Driving Forces

Powerful influences or motivations that propel an individual, group, or organization towards achieving goals or initiating change.

Unfreezing

The initial phase in the change process where existing behaviors, attitudes, or norms are challenged or questioned in preparation for change.

Driving Forces

Elements that motivate or push an organization or individual towards a particular direction or goal.