Question

_________ budget is designed to remain unchanged irrespective of the volume of output or turnover attained.

• A. Master
• B. Fixed
• C. Flexible
• D. All of the above

Answer 1

Answer: (B)

Fixed

A fixed budget is that budget which does not change with the volume of sale. It does not change due to increase or decrease in any activity. It is also called static budget.

A flexible budget is a budget that adjusts or flexes with changes in volume or activity. The flexible budget is more sophisticated and useful than a static budget.

The master budget is the aggregation of all lower-level budgets produced by a company's various functional areas, and also includes budgeted financial statements, a cash forecast, and a financing plan.