The report that compares actual performance and budgeted performance based on actual activity level is called a ______ budget performance report.

The report that compares actual performance and budgeted performance based on actual activity level is called a ______ budget performance report.

• A. Master Budget Performance Report
• B. Static Budget Performance Report
• C. Rolling Budget Performance Report
• D. Flexible Budget Performance Report

Answer: (D)

The key idea is adjusting the budget to reflect the actual level of activity. A flexible budget takes the actual quantity produced or sold and recalculates what costs and revenues should have been at that level. The budget performance report then compares what actually happened to these recalculated figures, showing variances that isolate differences due to price or efficiency rather than simply because more units were produced. This makes performance analysis meaningful when activity differs from the original plan. Static or master budgets use one planned activity level, so their comparisons can mix volume differences with performance differences. A rolling budget is a continuously updated forecast for future periods, not specifically a report that compares actual results to an adjusted budget. So the report described is the flexible budget performance report.

The key idea is adjusting the budget to reflect the actual level of activity. A flexible budget takes the actual quantity produced or sold and recalculates what costs and revenues should have been at that level. The budget performance report then compares what actually happened to these recalculated figures, showing variances that isolate differences due to price or efficiency rather than simply because more units were produced. This makes performance analysis meaningful when activity differs from the original plan.

Static or master budgets use one planned activity level, so their comparisons can mix volume differences with performance differences. A rolling budget is a continuously updated forecast for future periods, not specifically a report that compares actual results to an adjusted budget. So the report described is the flexible budget performance report.