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Question

The difference between fixed and variable cost has a special significance in the preparation of _________.

A
Flexible Budget
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B
Master Budget
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C
Cash Budget
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D
Sales Budget
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Solution

The correct option is A Flexible Budget
Fixed cost remains constant irrespective of the volume of activity but the variable cost changes according to the volume of production.
While preparing a flexible budget which is prepared for various level of volume, fixed cost and variable cost has a special significance.

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