Answer:
The correct answer is letter "D": decreases total costs.
Explanation:
Flexible budgets are those designed to tolerate a margin of variance in costs during the operations of a business. Typically, those changes arise in different points during a given period and are to be addressed as soon as they are noticed. In such a scenario, flexible budgets help businesses to update the budget computed at the beginning of operations by comparing the current activity with the expected activity of the firm.
If activity decreases, a flexible budget will face a decrease in the total costs of the operations.
