TRUE or FALSE

A static planning budget provides information about what costs and revenues should have been at the actual level of activity. A flexible budget report should contain actual expenses and revenues but not budgeted expenses and revenues. The activity variance for revenue is unfavorable if the actual level of activity for the period is less than the planned level of activity. If the actual level of activity is 4% less than planned, then the variable costs in the static budget should be decreased by 4% before comparing them to actual costs. If the required rate of return is 15% and the internal rate of return of a potential project or investment is 10%, the company should forego the project or investment. When considering a number of investment projects, the project that has the shortest payback period will always have the highest internal rate of return (IRR). When cash flows are uneven and vary from year to year, the net present value method cannot be calculated. When discounted cash flow methods of capital budgeting are used, the working capital required for a project is ordinarily counted as a cash inflow at the beginning of the project and as a cash outflow at the end of the project. In capital budgeting computations, discounted cash flow methods assume that all cash flows occur at the beginning of a period. A favorable spending variance occurs when the cost in the flexible budget exceeds the amount of that actual cost (i.e. the corresponding cost in the actual results)