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TP6.
LO 7.4The management of Hess, Inc., is developing a flexible budget for the upcoming year. It was not pleased with the small amount of net income the budget showed at all sales levels and is contemplating using a less expensive material. This action reduces direct material cost by $1 per unit. What would be the effects on financial statements and a flexible budget if management takes this approach? Are there other factors that need to be considered?

Respuesta :

eyukwe

Answer:

Yes, common and operational expenses.

The effect on financial statement  would be dynamic, as some figures would fluctuate based on volume

Explanation:

A flexible budget is very much adjustable based on the level of production activity. Hence this will also reflect on the financial statement, if management takes this approach