Fixed budget is defined as

Fixed budget is defined as

• A. A budget produced for a single activity level
• B. A rolling forecast updated monthly
• C. A flexible budget adjusted for activity levels
• D. A budget for multiple activity levels

Answer: (A)

A fixed budget is prepared for a single level of activity and does not change if actual activity differs. It sets costs and revenues as if everything will occur at that one assumed level, so variances show how actual results diverge from that fixed plan. Rolling forecasts update over time as new periods come in, not a static plan. A flexible budget adjusts for different activity levels, and a budget designed for multiple activity levels describes varying scenarios rather than a single fixed plan. Therefore, the fixed budget definition matches a budget produced for a single activity level.

A fixed budget is prepared for a single level of activity and does not change if actual activity differs. It sets costs and revenues as if everything will occur at that one assumed level, so variances show how actual results diverge from that fixed plan. Rolling forecasts update over time as new periods come in, not a static plan. A flexible budget adjusts for different activity levels, and a budget designed for multiple activity levels describes varying scenarios rather than a single fixed plan. Therefore, the fixed budget definition matches a budget produced for a single activity level.