Question: Why do companies develop flexible budgets for variance analysis? Because flexible budgets reflect the normal production capacity. Because flexible budgets are more accurate than static

Why do companies develop flexible budgets for variance analysis?

Because flexible budgets reflect the normal production capacity.

Because flexible budgets are more accurate than static budgets.

Because actual activity level may not be the same as the budgeted activity level.

Because static budgets become obsolete in the end of year when variance analysis are performed.

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