Asked by Alanis Matthews on Jun 24, 2024
Verified
The activity index used in preparing a flexible budget should not influence the variable costs that are being budgeted.
Activity Index
The activity that causes changes in the behavior of costs.
Variable Costs
Costs that vary directly with the level of production or service output, such as materials and labor.
- Learn about the formulation of flexible budgets.
Verified Answer
RT
Ribaraoi TekieraJun 29, 2024
Final Answer :
False
Explanation :
The activity index (or base) directly influences variable costs in a flexible budget, as these costs are expected to change in proportion to changes in the level of activity.
Learning Objectives
- Learn about the formulation of flexible budgets.
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