Reference no: EM132319278

Question

True or False questions

1. Direct material can be directly traced to the goods or services being produced.

2. The break-even point is where total sales revenue equals total costs.

3. Most firms would like to earn operating income equal to the break-even point.

4. To find the number of units to sell to earn the targeted income, it is acceptable to simply adjust the break-even units equation by adding target income to the variable cost.

5. A firm should develop a strategic plan before preparing a budget.

6. The direct labor budget includes units to be produced, direct lab our time needed per unit, and total direct labor cost for the period.

7. Employees who convert direct materials into a product or who provide a service to customers are classified as indirect labor.

8. Projects that if accepted preclude the acceptance of all other competing projects are called mutually exclusive projects.

9. In order to use the payback period model, the proposed investment must have even cash inflows.

10. A disadvantage of the payback period is that it ignores the time value of money.