Answer (D) is correct . With flexible budgeting, the firm prepares a series of budgets for many levels of sales and production. ??At the end of the period, management can compare actual sales performance with the appropriate budgeted level in the flexible budget.
Answer (A) is incorrect because Top-down budgeting entails imposition of a budget by top management on lower-level employees. It is the antithesis of participatory budgeting.
Answer (B) is incorrect because Life-cycle budgeting estimates a product’s revenues and costs for each link in the value chain from R&D and design to production, marketing, distribution, and customer service. The product life cycle ends when customer service is withdrawn.
Answer (C) is incorrect because A static budget is for only one level of activity.
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