Fixed cost variances are not more clearly presented on a flexible budget variance report than on a static budget variance report.
This statement is somewhat backwards, but it is the best answer choice from among those given. Flexible budget amounts for variable revenues and costs are adjusted to the actual level of activity that has occurred before actual revenues and costs are compared with them. So the "given" output level is derived from the actual activity level, not the other way around.
If production is less than was planned, variances in a static budget variance report will be greater than variances in a flexible budget variance report. The decrease in costs due to the decrease in production will be included in the static budget variance report, whereas decreases in costs due to decreases in production are not included in a flexible budget report.
To be as meaningful as possible, standards should be updated whenever circumstances change, regardless of whether a static budget or a flexible budget is being used. The use of a flexible budget does not make it easier to update standards.
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