PART II — TRUE/FALSE Instructions: Designate whether each of the following statements is true or false by circling the T or F. TF 1.Contribution margin is the amount of revenue left over to cover selling and administrative costs after manufacturing costs have been deducted. TF 2.The margin of safety is the difference between actual profit and target net income. TF 3. At the break-even point, total contribution margin is equal to total fixed costs. TF 4.A company’s break-even point can be decreased by increasing the contribution margin ratio. TF 5.A CVP income statement classifies costs by function, but a traditional income statement classifies costs by cost behavior (variable or fixed).
PART II — TRUE/FALSE
Instructions: Designate whether each of the following statements is true or false by circling the T or F.
TF 1.Contribution margin is the amount of revenue left over to cover selling and administrative
TF 2.The margin of safety is the difference between actual profit and target net income.
TF 3. At the break-even point, total contribution margin is equal to total fixed costs.
TF 4.A company’s break-even point can be decreased by increasing the contribution margin ratio.
TF 5.A CVP income statement classifies costs by function, but a traditional income statement classifies costs by cost behavior (variable or fixed).
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