TRUE OR FALSE

1. The payback period reflects the amount of time for the investment to generate enough net cash flow to return the cash initially invested to purchase it.

2. Net cash flow can be calculated by adjusting the projected net income from a project for any non-cash revenues and expenses.

3. If the internal rate of return (IRR) of an investment is lower than the hurdle rate, the project should be rejected.

4. A fixed budget performance report never provides useful information for evaluating variances.

5. One possible explanation for direct labor rate and efficiency variances is the use of workers with different skill levels.

6. Managers must ensure that activities of employees and departments, contribute to meeting the companys overall goals.

7. The task of preparing a budget should be the sole task of the most important department in an organization.

8. The capital expenditures budget summarizes the effects of investing activities on cash.

9. A manufacturing budget shows dollar amounts estimated to be spent to purchase additional plant assets and amounts expected to be received from plant asset disposals.

10. Budgets are normally more effective when all levels of management are involved in the budgeting process.