Why did question 1 of December 2009 only flex the costs and not the revenue?
In this case, only costs were flexed because costs are invariably controllable. Revenues were not flexed as they are less controllable than costs, this being a college. College revenues are mainly affected by factors beyond management control eg course fees are discounted in order to stimulate students’ demand. Also, the need to make assumptions regarding sales mix means that revenue prediction becomes far more difficult.
