A. Flexible budgets are prepared for different levels of activity. In other words, a flexible budget is based on the static budget, but variable revenues and variable expenses are adjusted upward or downward to reflect the actual activity level. A flexible budget is more useful than a static budgetsas it allows the company to compare the actual results with the budgeted results that have been adjusted for the actual level of activity.

B. The inflation rate may be considered in various types of budgets, for example a fixed or static budget, a project budget, or a flexible budget.

C. Flexible budgets are prepared for different levels of activity and do not evaluate the usage of capacity.

D. Flexible budgets are prepared for different levels of activity. In other words, a flexible budget is based on the static budget, but variable revenues and variable expenses are adjusted upward or downward to reflect the actual activity level. The actual activity level might well change when prices change, but the flexible budget does not incorporate changes in prices in its budgeted amounts, only changes in volume.