Why Does Activity Flexible Budgeting Provide a More Accurate Prediction

Multiple Choice

Why does activity flexible budgeting provide a more accurate prediction of costs than a traditional flexible budgeting approach?

A) Costs often vary with more than one driver, and direct labour hours are not correct.
B) Unit-level drivers are often not highly correlated with direct labour hours.
C) Direct labour hours are often not measured correctly.
D) Costs often vary with more than one driver, and non-unit-level drivers are often not highly correlated with direct labour hours.