1. What does a flexible budget performance report do that a simple comparison of budgeted to actual results does not do?
2. How does a flexible budget based on two cost drivers differ from a flexible budget based on a single cost driver?
3. What assumption is implicitly made about cost behavior when a static planning budget is directly compared to actual results? Why is this assumption questionable?
4. What assumption is implicitly made about cost behavior when all of the items in a static planning budget are adjusted in proportion to a change in activity? Why is this assumption questionable?