Why should the budget allowance for variable costs be flexed?Multiple choice question.To pad the budget in case the cost estimates were too lowTo show the costs that should have been incurred for the level of activity actually experiencedTo improve the income statement by under-reporting actual costsTo average out the discrepancies between actual costs and estimated costs

Select all that applyWhich statements regarding flexible budgeting are true?Multiple select question.The budget allowance for variable costs should be flexed to show the costs that should have been incurred for the actual level of activity.It involves variable cost items such as direct materials, direct labor, and variable manufacturing overhead.It is done by multiplying the variable cost per unit of each variable cost item by the actual activity level.Flexible budgeting should include an adjustment to the fixed overhead budget.

When the original budget amount for variable cost items based on planned activity is adjusted (flexing the budget), a budget (allowance/variance) is calculated. It is based on actual activity for the period, to compare actual costs incurred with costs expected to be incurred at the actual level of activity that was achieved.

VARIABLE COSTING

When preparing a flexible budget Blank______.Multiple choice question.both variable and fixed costs remain constantfixed costs change based on activity and variable costs remain constantboth variable and fixed costs change based on activityvariable costs change based on activity and fixed costs remain constant

When preparing a performance report, flexing the budget is necessary in order to:Multiple choice question.adjust the budget at the beginning of the periodidentify the cost behavior pattern of the budgeted itemscalculate more accurate variancesadjust actual results so that they are closer to budgeted amounts