What three criteria should be used when selecting an activity base for constructing a flexible budget?

When selecting an activity base for constructing a flexible budget, three key criteria should be considered: relevance to costs, measurability, and variability. The activity base should directly correlate with the costs being analyzed, allowing for accurate adjustments as activity levels change. Additionally, it should be easily measurable to ensure reliable data collection and analysis. Finally, the activity base should exhibit variability, meaning that it should reflect changes in costs as production or service levels fluctuate.