The correct answer is: D. Is a plan for a single level of sales (or other measure of activity), while a variable budget consists of several plans, one for each of several levels of sales (or other measure of activity)
A fixed budget is a budget that is prepared for a single level of activity. It is based on the assumption that costs will remain constant at that level of activity. A variable budget, on the other hand, is a budget that is prepared for a range of activity levels. It takes into account the fact that costs will vary with the level of activity.
A fixed budget is useful for planning and control when the level of activity is relatively stable. However, it can be misleading if the level of activity changes significantly. A variable budget is more accurate than a fixed budget when the level of activity is variable. It allows managers to see how costs will change as the level of activity changes.
Here is a brief explanation of each option:
- Option A: This is incorrect because a fixed budget includes both fixed and variable costs. Fixed costs 213.4-11.5c23.5-6.3 42-24.2 48.3-47.8 11.4-42.9 11.4-132.3 11.4-132.3s0-89.4-11.4-132.3zm-317.5 213.5V175.2l142.7 81.2-142.7 81.2z"/> Subscribe on YouTube