ACCA Applied Knowledge · Management Accounting · Flexible budgets
Which cost would a flexible budget leave unchanged when activity rises from 10,000 to 11,000 units, assuming the relevant range is not exceeded?
Factory rent stays unchanged because it is a fixed cost that does not vary with activity within the relevant range. Direct materials, piecework labour and packaging materials are variable and would be flexed upward with output.
- ADirect materials
- BPiecework labour
- CFactory rentCorrect
- DPackaging materials
Explanation
Factory rent is a fixed cost and does not change within the relevant range. The other costs vary in proportion to output and are flexed upward.
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