A process whereby the effect of fluctuations in the level of activity is built into the budgeting system is referred to as flexible budgeting.

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Jonathan Little · Accepted Answer

Final Answer : True, Explanation :  Flexible budgeting is a budgeting approach that allows for adjustments to the budget as actual activity levels fluctuate. This means that the budget is not fixed, but rather flexible, and can be modified based on changes in activity levels.

A process whereby the effect of fluctuations in the level of activity is built into the budgeting system is referred to as flexible budgeting.

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