True or false: cost-volume-profit

Exercise and reference answers

Questions

1. Statement is true

   Yes

   Statement

   Fixed costs stay level within the relevant range.

2. Statement is true

   Yes

   Statement

   Variable costs vary per unit of production.

3. Statement is true

   No

   Statement

   Contribution margin subtracts fixed costs first.

4. Statement is true

   Yes

   Statement

   The CM ratio is a percent of the selling price.

5. Statement is true

   No

   Statement

   Break-even is where profit is at its maximum.

Instructions

Tap True or False for each statement.

Explanation