In a flexible budget, what remains constant regardless of the level of activity?
Practice Questions
1 question
Q1
In a flexible budget, what remains constant regardless of the level of activity?
Variable costs
Total costs
Fixed costs
Contribution margin
In a flexible budget, fixed costs remain constant regardless of the level of activity, while variable costs change with activity levels.
Questions & Step-by-step Solutions
1 item
Q
Q: In a flexible budget, what remains constant regardless of the level of activity?
Solution: In a flexible budget, fixed costs remain constant regardless of the level of activity, while variable costs change with activity levels.
Steps: 5
Step 1: Understand what a flexible budget is. A flexible budget adjusts based on the level of activity or output.
Step 2: Identify the two types of costs in a budget: fixed costs and variable costs.
Step 3: Recognize that fixed costs do not change with the level of activity. Examples include rent and salaries.
Step 4: Understand that variable costs change with the level of activity. Examples include materials and labor costs that increase with more production.
Step 5: Conclude that in a flexible budget, fixed costs remain constant regardless of how much activity occurs.
