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Unformatted text preview: activity for each cost 3. Identify the fixed costs and determine the budgeted amount for each cost 4. Prepare the budget for selected increments of activity within the relevant range The information that is found on a flexible budget is the same as what the master budget consists of but it differs because of the activity level. The information used to evaluate performance on a flexible budget is a better tool because it responds to changes in activity. When performance evaluation is based on a static budget, there is little incentive to drive sales and production above anticipated levels because increases in volume tend to produce more costs and unfavorable variances. The flexible budget based performance evaluation provides an incentive to help drive up sales and production....
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- Spring '10