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True or false 1 The starting point of any Master Budget is the Sales Budget 2 A Master (Static) Budget is not adjusted for changes
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1 The starting point of any Master Budget is the Sales Budget 2 A Master (Static) Budget is not adjusted for changes in actual quantities 3 Standard Costs are used to "smooth-out" (normalize) fluctuations in direct material costs 4 The Time Value of Money depends of several key factors: Principal amount of funds Rate of Interest Time Period 5 If a Price Variance is $500,000 Favorable and a Quantity Variance is $500,000 Unfavorable Management does not need to investigate the variances since the Total Variance is Zero 6 Applying the concept of Compound Interest : $20,000 invested for 2 (two) years, at 10% per year, would have a value of exactly $ 24,000 at the end of the 2nd year. 7 An Annuity is a stream of equal installments made at equal time intervals 8 A Variance is the difference between Actual Amounts vs. Budgeted Amounts 9 The Hurdle Rate is often determined, and adjusted, by the risk associated with the underlying investment 10 One purpose of Capital Budgeting is to assess and rank projects that are competing for Company resourcesStep by Step Solution
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