The Purpose of a Flexible Budget Is To

question 294

Multiple Choice

The purpose of a flexible budget is to:

• A)remove items from performance reports that are not controllable by managers.
• B)permit managers to reduce the number of unfavorable variances that are reported.
• C)update the static planning budget to reflect the actual level of activity of the period.
• D)reduce the amount of conflict between departments when the master budget is prepareD.When a flexible budget is used in performance evaluation, actual costs are compared to what the costs should have been for the actual level of activity during the period rather than to the static planning budget.

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Definitions:

Hawk-Dove Game

A model in game theory illustrating the conflict between aggressive (hawk) and peaceful (dove) strategies.

Payoff

A payoff refers to the return or the outcome received from a particular investment or decision, often evaluated in terms of profit or loss.

Proportion

A mathematical relation between parts, quantities, or amounts that expresses how much one is relative to the other.

Equilibrium

A state in which supply and demand are balanced, or a situation in which conflicting forces cancel each other out, resulting in a stable outcome or condition.