The correct answer is: (ii) only.
Statement (i)is not correct. A fixed budget may be useful for control purposes where activity levels are not prone to change, or where a significant proportion of costs is fixed, so that alterations in activity levels do not affect the costs incurred.
Statement (ii)is correct. Fixed and variable costs must be separately identified so that the allowance for variable costs may be flexed according to the actual activity level.
Statement (iii) is not correct. Budgetary control procedures can be used to monitor and control income as well as expenditure.
