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Can you please help to answer the question:
TR Co sells a delivery service to a government department. The government department always purchases 155 hours of service every week. TR Co works 52 weeks each year.
Which TWO of the following statements are correct in this situation?
• The fixed budget is suitable for budgetary control
• A flexible budget should be prepared each week for control purposes
• A fixed budget should be used to plan the future resource requirements
• A flexible budget would ensure better staff motivationWill it be correct to choose 1st and 3rd option since the government always purchases a fixed number of hours and there is no need to prepare a flexible budget?
Where did you find this question, because it is a very odd question to be asked 🙂
Usually 1 and 3 would not be correct, but as you write in this case (given that they always purchases the same number of hours) then they would seem to be correct.
You presumably have an answer in the same book in which you found the question, so what does the answer write?
Thank you. This question is from the real exam, my friend that entered the exam last week remembered some questions and wrote me this way. Probably the question is missing the details.
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