A Flexible Budget Is an Estimate of What Revenues and Costs

question 163

True/False

A flexible budget is an estimate of what revenues and costs should have been, given the level of activity that had been planned for the period.

---

Definitions:

Period Costs

These are costs that are not directly tied to production and are expensed in the period they are incurred, such as selling, general, and administrative expenses.

Factory Overhead

All indirect costs associated with manufacturing, such as indirect labor, maintenance, and utilities, not directly tied to a specific product.

Direct Labor Hours

The total number of work hours spent by employees who directly manufacture or produce goods.

Predetermined Overhead Rate

An estimate used to allocate overhead costs to products or job orders, calculated before the costs are incurred.