Answer :
The first step in creating a flexible budget is to list all of the items that need to be included as well as their fixed and variable components. This assertion is true.
Budgets that are flexible can be changed to reflect changes in revenue and expenses during the fiscal year, taking into account anticipated volatility.
The following actions are required to create a flexible budget: Determine every fixed expense and separate it in the budget model. As activity metrics change, quantify the amount to which all variable expenses vary.
Managers may benefit from using flexible budgets to better understand how changing activity levels affect expenditures and profits. Additionally, they can aid managers in choosing more wisely how to distribute resources.
Complete question:
In preparing flexible budgets, the first step is to identify the fixed and variable components of the various costs and expenses being budgeted.
- True
- False
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