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

Question

BlackTom AI · Accepted Answer

When evaluating the benefits of flexible budgets, it helps to recall their purpose: to adapt budgeting to actual activity levels and changing conditions so performance can be assessed accurately.
Option A states that flexible budgets provide a more relevant basis for performance evaluation by considering the actual activity levels achieved. This is true, because the budget is adjusted to reflect the underlying level of activity, allowing meaningful comparisons.
Option B claims that flexible budgets help identify areas of cost efficiency or inefficiency more accurately. This is correct, since variances are more meaningful when budget figures align with the actual activity, highlighting true efficiency or overspending.
Option C asserts that flexible budgets allow for dynamic adjustments to budgets based on real-world conditions. This is a core feature of flexible budgeting, enabling managers to respond to changes in volume, mix, or other factors.
Option D states that flexible budgets eliminate the need for variance analysis since actual costs are compared to the original static budget. This is incorrect: one of the key uses of flexible budgeting is to perform variance analysis against the flexible (activity-adjusted) budget, not the original static budget. Comparing to a static budget can obscure variances that arise from activity level changes, and flexible budgeting explicitly enables variance analysis at actual activity levels.
Therefore, the statement in Option D is not a benefit of using flexible budgets, whereas Options A, B, and C describe valid advantages.

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

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