Question 5: Critical Thinking (14 marks) What is a flexible budget? Why would management want to use a flexible budget to compare to actual results? (2 marks) 5 Assume the company has a margin of safety percentage of 50%. What does 50% mean? Would this be considered risky for the company? (2 marks) 6 7 In what circumstance would management like to have a low operating leverage? Explain your reasoning. (2 marks) 0 1 If you were providing advice to a junior accountant, how would you describe common fixed costs? Use an example to support your answer. 12 (2 marks) If you were providing advice to a junior accountant, how would you describe traceable fixed costs? Use an example to support your answer. (2 marks) What is the main weakness of using return on investment as a performance measure? Explain your reasoning with an example (2 marks)