Circle the letter of the best response.

1. Which of the following is the difference between a flexible budget and a static budget?

A. The static budget considers all costs and a flexible budget considers only variable costs.

B. The static budget is prepared for one level of production and a flexible budget is prepared for various levels of production.

C. The static budget provides for accurate performance evaluations, while the flexible budgets various levels make performance evaluations difficult.

D. The static budget is prepared for the entire production facility and consists of all the flexible budgets prepared for each division.