A company sets a budget for customer service calls but receives significantly more calls than anticipated. To effectively evaluate the customer service department's performance, what kind of budget adjustment would be most appropriate?

Question: A company sets a budget for customer service calls but receives significantly more calls than anticipated. To effectively evaluate the customer service department's performance, what kind of budget adjustment would be most appropriate?

Answer options:

• A zero-based budget.
• A static budget. ✅ A flexible budget.
• An incremental budget.

Correct answer: A flexible budget.

Explanation: A flexible budget is appropriate in this scenario because it adjusts for changes in the activity level (number of customer calls) to provide a more relevant benchmark for evaluating performance, allowing management to see if costs were controlled given the actual volume of activity.