What is the primary difference between a static budget and a flexible budget? A)

Question

What is the primary difference between a static budget and a flexible budget?

A) The static budget contains only fixed costs, while the flexible budget contains only variable costs.

B) The static budget is prepared for a single level of activity, while a flexible budget is adjusted for different activity levels.

C) The static budget is constructed using input from only upper level management, while a flexible budget obtains input from all levels of management.

D) The static budget is prepared only for units produced, while a flexible budget reflects the number of units sold.

Explanation / Answer

PRIMARY DIFFERENCE BETWEEN STATIC AND FLEXIBLE BUDGET IS The static budget is prepared for a single level of activity, while a flexible budget is adjusted for different activity levels i.e. option B

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