A flexible budget:

A Never changes

B Adjusts budgeted amounts for the actual level of activity achieved

C Is prepared annually only

D Uses only fixed costs

✓ Correct Answer: Option B

Flexible budgets adjust for actual volume, enabling meaningful variance analysis by comparing actual costs to what costs should have been at actual activity.

💡 Why is B) the correct answer?

The correct answer to the question "A flexible budget:" is Option B: Adjusts budgeted amounts for the actual level of activity achieved.

The other options — A) Never changes, C) Is prepared annually only, D) Uses only fixed costs — are incorrect for this CPA Exam Prep question. As explained above: Flexible budgets adjust for actual volume, enabling meaningful variance analysis by comparing actual costs to what costs should have been at actual activity.

📚 About This CPA Exam Prep Practice Question

This 2-level CPA Exam Prep question from the Business Environment (BEC) topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free CPA Exam Prep practice test or use flashcards for spaced repetition review.

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A flexible budget:

✓ Correct Answer: Option B

📚 About This CPA Exam Prep Practice Question

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