True or False?

1. Based on predicted production of 48,000 units, a company budgets $600,000 of fixed costs and $492,000 of variable costs. If the company actually produces 40,000 units, the flexible budget amount of fixed costs is $600,000.

2. A company reports the following: actual total overhead of $1,960; budgeted (flexible) overhead at units produced of $1,600; and standard overhead applied of $1,800. Controllable variance is a $160 unfavorable variance.

3. A company has two operating departments: Mixing and Bottling. Mixing has 600 employees and Bottling has 400 employees. If office costs of $320,000 are allocated to operating departments based on the number of employees, then $128,000 of the office costs should be allocated to the Mixing department.

4. The preferred approach to allocate joint costs to products is the value basis, which allocates a joint cost in proportion to the sales value of the output produced by the process at the split-off point.

5. Departmental contribution to overhead is the same as gross profit generated by that department.

6. The payback period is a method used to evaluate investment decisions by measuring the expected amount of time to recover the initial investment amount.