When using a flexible budget, a decrease in activity within the relevant range:

Question

BlackTom AI · Accepted Answer

Consider the concept of a flexible budget, which adjusts costs to the actual level of activity within the relevant range.
Option 1: 'decreases variable cost per unit.' In a flexible budget, the variable cost per unit typically remains constant per unit; it does not automatically decrease just because total activity decreases. So this statement is inaccurate.
Option 2: 'increases variable cost per unit.' This would imply costs per unit go up as activity declines, which contradicts the idea of a stable variable cost per unit in a flexible budget. Therefore this is false.
Option 3: 'decreases total costs.' As activity falls, the total cost in a flexible budget generally falls as well, since there are fewer units produced or sold and the variable portion of costs shrinks accordingly, while fixed costs stay within the relevant range. This aligns with how flexible budgeting behaves.
Option 4: 'increases total costs.' This would occur only if fixed costs rise or variable costs per unit rise with lower activity, which is not characteristic of a standard flexible budget within the relevant range. Hence this is incorrect.
In summary, the correct implication of a decrease in activity within the relevant range is a reduction in total costs, due to fewer units and the associated variable costs.

ACTG-2300-4 Chapter 9 PreClass Work

When using a flexible budget, a decrease in activity within the relevant range:

查看解析

登录即可查看完整答案

类似问题

Which of the following is NOT true regarding variable budgets?

Which of the following is NOT a benefit of using flexible budgets?

Which of the following is NOT a benefit of using flexible budgets?

Which of the following is NOT a benefit of using flexible budgets?

In a consumer society, many adults channel creativity into buying things

Economic stress and unpredictable times have resulted in a booming industry for self-help products

People born without creativity never can develop it

A product has a selling price of $20, a contribution margin ratio of 40% and fixed cost of $120,000. To make a profit of $30,000. The number of units that must be sold is: Type the number without $ and a comma. Eg: 20000

更多留学生实用工具

考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单