Flexible Budget: The budget made to recognize the difference between fixed, semi-variable, and variable costs in accordance with the change in the level of activity attained is stated as a flexible budget. In order to prepare flexible costs, the first essential step is to segregate the cost into three categories; fixed costs, semi-variable, and variable costs. Fixed cost remains the same irrespective of the activity level. Variable cost and semi-variable changes as per the change in the activity level. To prepare: The flexible budget for Company LR.

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Chapter 9, Problem 10E

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Concept Introduction:

Flexible Budget: The budget made to recognize the difference between fixed, semi-variable, and variable costs in accordance with the change in the level of activity attained is stated as a flexible budget. In order to prepare flexible costs, the first essential step is to segregate the cost into three categories; fixed costs, semi-variable, and variable costs. Fixed cost remains the same irrespective of the activity level. Variable cost and semi-variable changes as per the change in the activity level.

To prepare: The flexible budget for Company LR.

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