# Question

Following are a series of statements regarding topics discussed in this chapter.

(a) At the break-even point, total revenue dollars equal total variable costs.

(b) To compute a desired after-tax proﬁt, the before-tax proﬁt is divided by (1 - the tax rate).

(c) Incremental analysis focuses on the ﬁnancial implications of possible changes.

(d) To perform CVP analysis for a multiproduct company, each product’s BEP must be determined separately.

(e) The proﬁt-volume graph does not depict revenues separate from costs.

(f) Fixed costs divided by the contribution margin ratio equals the break-even point in dollars.

(g) Margin of safety and degree of operating lever-age may be expressed in dollars, in units, or as a percentage.

(h) After ﬁxed costs are covered, contribution margin is the amount the sale of one unit contributes to net income.

(i) The break-even graph depicts ﬁxed costs, total costs, and revenues for any level of output.

(j) The further away a company gets from BEP, the higher its degree of operating leverage.

(k) When variable cost per unit decreases or ﬁxed cost in total increases, contribution margin per unit or in total will decrease.

Required:

Indicate whether each statement is true (T) or false (F).

(a) At the break-even point, total revenue dollars equal total variable costs.

(b) To compute a desired after-tax proﬁt, the before-tax proﬁt is divided by (1 - the tax rate).

(c) Incremental analysis focuses on the ﬁnancial implications of possible changes.

(d) To perform CVP analysis for a multiproduct company, each product’s BEP must be determined separately.

(e) The proﬁt-volume graph does not depict revenues separate from costs.

(f) Fixed costs divided by the contribution margin ratio equals the break-even point in dollars.

(g) Margin of safety and degree of operating lever-age may be expressed in dollars, in units, or as a percentage.

(h) After ﬁxed costs are covered, contribution margin is the amount the sale of one unit contributes to net income.

(i) The break-even graph depicts ﬁxed costs, total costs, and revenues for any level of output.

(j) The further away a company gets from BEP, the higher its degree of operating leverage.

(k) When variable cost per unit decreases or ﬁxed cost in total increases, contribution margin per unit or in total will decrease.

Required:

Indicate whether each statement is true (T) or false (F).

## Answer to relevant Questions

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