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7 November, 12:05

In a flexible budget, what will happen to fixed costs as the activity level increases?

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  1. 7 November, 12:15
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    In a fixed budget, if the activity level increases, some of the costs associated with the budget increase as well.

    Typically, with a fixed budget the budget plan stays the same when activity increases or decreases. However, sometimes the increase is so large in activity that it's inevitable to increase budget costs to stay on the appropriate production track.
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