Flexible budget changes with:
ACash position
BVolume of activity
CYear-end profit
DAudit findings
Answer & Solution
Correct answer: B. Volume of activity
1. A flexible budget restates the plan at multiple activity levels.
2. Variable costs flex with the chosen volume; fixed costs stay constant.
3. This contrasts with a fixed budget set at a single planned level.
4. Hence flexible budgets change with volume of activity.
_Source: ICAI BoS Inter Paper 3, Ch 15 "Budget", §15.8.1 ¶2_
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