Answer (D) is correct . A flexible budget is essentially a series of several budgets prepared for various levels of sales and production. At the end of the period, management can compare actual costs or performance with the appropriate budgeted level in the flexible budget. A flexible budget is designed to allow adjustment of the budget to the actual level of activity before comparing the budgeted activity with actual results.
Answer (A) is incorrect because Comparing results using a monthly budget is no easier than using a budget of any other duration.
Answer (B) is incorrect because A master budget is the overall budget. It will not facilitate comparisons unless it is also a flexible budget.
Answer (C) is incorrect because A rolling (or continuous) budget is revised on a regular (continuous) basis. It will not facilitate comparisons unless it is also a flexible budget.
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