Multiple Choice QuestionWhen preparing a flexible budget, variable costs are expressed as a constant amount _____, and fixed costs are expressed as a constant amount _____.Multiple choice question.per unit; in totalper unit; per unitin total; per unitin total; in total
Question
Multiple Choice QuestionWhen preparing a flexible budget, variable costs are expressed as a constant amount _____, and fixed costs are expressed as a constant amount _____.Multiple choice question.per unit; in totalper unit; per unitin total; per unitin total; in total
Solution
The correct answer is "per unit; in total".
Here's why:
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Variable costs: These are costs that change in proportion to the goods or services that a business produces. In a flexible budget, these are expressed on a per unit basis because they can vary depending on the volume of units produced.
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Fixed costs: These are costs that do not change with the level of output. They are expenses that have to be paid by a company, independent of any business activity. Therefore, in a flexible budget, these are expressed as a constant total amount because they do not change with the level of output.
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