State True or False

1.The standard cost card for a product includes a list of all inputs required to complete one unit of the product with the standard quantity and standard cost of each input.

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2.Residual income is the net operating income that an investment center earns above the minimum required return on the investment in operating assets.

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3.The production budget includes detailed information as to the number of units of direct materials and the number of direct labor hours required for each budget period for a manufacturing business.

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4.In determining the selling price of a special order that can be completed using existing capacity, the fixed costs per unit should be included in the consideration of the costs of the special order.

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5.Advertising costs are considered product costs for external financial reports since they are incurred to promote specific products.

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6.Sunk costs are irrelevant in making decisions.

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7.Activity-based costing is only useful in allocating manufacturing overhead costs.

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8.In the target costing approach to pricing, the total cost of a product is first determined and then an expected level of mark-up is added to get the desired selling price.

Ans: 9.Projects with shorter payback periods are always more profitable than projects with longer payback periods.

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10.ROI and residual income can be used as performance measures.

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