Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher

Exercise 34

What is the basic difference between a master budget and a flexible budget
a. A flexible budget considers only variable costs; a master budget considers all costs.
b. A master budget is based on a predicted level of activity; a flexible budget is based on the actual level of activity.
c. A master budget is for an entire production facility; a flexible budget is applicable only to individual departments.
d. A flexible budget allows management latitude in meeting goals; a master budget is based on a fixed standard.