1) Flexible budgets are designed to show different possible costs for one anticipated level of output.

2) All master budgets are prepared for only one level of activity.

3) In a flexible budget, the fixed costs will remain constant regardless of different levels of activity shown in the budget.

4) A performance report should include variances that indicate the difference between expected future results and desired results.

5) If actual revenues and expenses exceed expected revenues and expenses, all variances in the performance report will be favourable.

6) One cause of a flexible-budget variance might be a difference between expected and actual hourly wages for factory workers.

7) As the terms are used in the budgeting process, it is possible for a company to be effective at the same time it is inefficient.

8) Flexible budgets evaluate whether operations are effective or not.

9) Favourable flexible-budget variances are always viewed as positive.

10) It is universally believed that the standards used in flexible budgets should be “perfection standards” so that individuals will constantly be challenged to perform better.



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