A budget created based on productivity projected from historical data is known as a:

A budget created based on productivity projected from historical data is known as a:

• A. Flexible
• B. Fixed
• C. Activity-based
• D. Zero-based

Answer: (A)

Flexible budgeting adjusts for changes in activity levels. When you project productivity from historical data, the budget is structured to scale costs and resources up or down based on actual output, making it responsive to what actually happens. This differs from a fixed budget, which stays the same regardless of activity, and from activity-based budgeting, which centers on costs tied to specific activities rather than adjusting for historical productivity. Zero-based budgeting starts from zero each period and justifies every item anew, rather than building on past productivity. So the approach described fits flexible budgeting.

Flexible budgeting adjusts for changes in activity levels. When you project productivity from historical data, the budget is structured to scale costs and resources up or down based on actual output, making it responsive to what actually happens. This differs from a fixed budget, which stays the same regardless of activity, and from activity-based budgeting, which centers on costs tied to specific activities rather than adjusting for historical productivity. Zero-based budgeting starts from zero each period and justifies every item anew, rather than building on past productivity. So the approach described fits flexible budgeting.