Question: The main difference between a static and flexible budget is that Multiple Choice static budget is used in the service industry while flexible budget is

The main difference between a static and flexible budget is that

Multiple Choice

  • static budget is used in the service industry while flexible budget is used for manufacturing sector only.

  • static budget is constructed using standard costs while the flexible budget uses a zero-based approach.

  • static budget is prepared for a single level of activity while a flexible budget can be flexed for different activity levels.

  • static budget is more useful for performance measurement purposes.

  • The flexible budget variance is caused by the difference in the sales volume between budgeted and actual activity.

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