When Should a Company Use an Activity-Based Flexible Budget with Multiple

question 16

Multiple Choice

When should a company use an activity-based flexible budget with multiple cost drivers instead of a simple flexible budget with one cost driver?

• A)when a significant portion of costs vary with only one cost driver
• B)when a significant portion of costs vary with the number of units of output
• C)when a significant portion of costs vary with the number of units of sales
• D)when a significant portion of costs vary with several different cost drivers

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Definitions:

Early Majority

A category in the diffusion of innovation theory describing individuals who adopt new products or ideas after the innovators and early adopters, representing a larger segment of the population.

Innovators

Individuals who are the first to adopt new products, services, or ideas, often helping to spread them to the wider population.

Late Majority

Late Majority consists of individuals who adopt new products or innovations after the average member of a society, typically displaying skepticism and waiting until the majority has tested the innovation.

Diffusion Of Innovation

A theory that seeks to explain how, why, and at what rate new ideas and technology spread through cultures.