Flexible budgets:

a. The basic difference between a master budget and a flexible budget is that:

(1) A flexible budget considers only variable costs, but a master budget considers all costs. (2) A flexible budget allows management latitude in meeting goals. whereas a master budget is based on a fixed standard. (3) A master budget is for an entire production facility, but a flexible budget is applicable to single departments only. (4) A master budget is based on a predicted level of activity, and a flexible budget is based on the actual level of activity.

b. A flexible budget is:

(1) Appropriate for control of factory overhead but not for control of direct materials and direct labor. (2) Appropriate for control of direct materials and direct labor but not for control of factory overhead. (3) Not appropriate when costs and expenses are affected by fluctua- tions in volume. (4) Appropriate for any level of activity.