Choice "D" is correct. A flexible budget provides cost allowances (adjustments) for different levels of activity. A static budget provides costs for one level of activity.Choice "a" is incorrect. Both types of budgets are used for planning. A flexible budget is better than a static budget for performance evaluation since it can be adjusted to the actual production level.Choice "b" is incorrect. Both flexible and static budgets include both variable and fixed costs.Choice "c" is incorrect. Both flexible and static budgets can be prepared at any level of management.
