Respond that the following statements are TRUE or FALSE:

1) An increase in selling price per unit increases the number of units required to break even.

2) If a company reduces its fixed costs, the operating income will increase by the same amount as the cost reduction.

3) The amount by which sales can decrease before the company incurs an operating loss is called breakeven point.

4) The margin of safety can be used to evaluate a company's plans for the future.

5) The margin of safety focuses on how much operating income is left over from sales revenue after covering all variable and fixed costs.

Answer rating: 100% (QA)

1 FALSE ... View the full answer