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In a flexible budget, what remains constant?
Practice Questions
Q1
In a flexible budget, what remains constant?
Variable costs per unit
Total fixed costs
Total variable costs
Sales price per unit
Questions & Step-by-Step Solutions
In a flexible budget, what remains constant?
Steps
Concepts
Step 1: Understand what a flexible budget is. A flexible budget adjusts based on the actual level of activity or output.
Step 2: Identify the components of a budget. A budget typically includes fixed costs and variable costs.
Step 3: Recognize that fixed costs are expenses that do not change with the level of activity. Examples include rent and salaries.
Step 4: Realize that in a flexible budget, while variable costs change with activity, total fixed costs remain the same.
Step 5: Conclude that the constant element in a flexible budget is the total fixed costs.
No concepts available.
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