A Flexible Budget May Be Prepared

question 86

Multiple Choice

A flexible budget may be prepared:

• A) Only when the company encounters excessive costs.
• B) At any time in the planning period.
• C) During the operating period only.
• D) Before the operating period only.
• E) After the operating period only.

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Definitions:

Overhead Costs

Expenses associated with the day-to-day running of a business that are not directly linked to the production or selling of goods and services.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and considered a part of the product’s cost.

Direct Labor

The labor costs directly associated with the production of goods, including wages for workers who are involved in the actual manufacturing process.

Allocation Base

A measure or statistic used to distribute indirect costs to different cost objects, such as departments or products.