True/False Questions

____13. If yearly insurance premiums are increased, this change in fixed costs will result in an increase in the break-even point.

____ 14. After the sales budget is prepared, the production budget is normally prepared next.

____ 15. The variance from standard for factory overhead cost resulting from operating at a level above or below 100% of normal capacity is termed volume variance.

____ 22. Standard cost variances are usually not reported in reports intended for stockholders.

____ 23. The ratio that indicates the percentage of each sales dollar available to cover the fixed costs and to provide operating income is termed the contribution margin ratio.

____ 24. The standard cost is how much a product should cost to manufacture.

____ 25. The production budget is the starting point for preparation of the direct labor cost budget.