A) As price increases, demand increases. B) As price increases, demand decreases. C) As demand increases, profit decreases. D) As price decreases, demand decreases. 2. One way a company can perform "what if budget analysis is by preparing a flexible bu A) True B) False 3. Budgeting often involves both monetary and nonmonetary measures of performance. A) True B) False 4. Which of the following budgets is prepared first? A) Cash budget B) Production budget C) Budgeted balance sheet D) Sales budget 5. Unfavorable variances are red flags that a manager has performed poorly. A) True B) False 6. The labor rate variance is equal to the difference between the actual number of labor hours worked ar the standard labor hours allowed, times the standard labor wage rate. A) True B) False 7. A company that utilizes just-in-time inventory eliminates the need for budgeting. A) True B) False 8. Management by exception refers to the practice of only investigating variances A) in areas of the company that have been performing poorly. B) in which the actual cost exceeds the budget. C) in product costs. D) that are material in dollar amounts relative to budgeted amounts. 9. The labor rate variance measures whether the rate paid to employees is more or less than the standard rate. A) True B) False static budget is prepared for a single anticipated level of production. True False Version C Page 1