5. Contribution margin represents the amount available to cover fixed expenses and then provide company profits.

___ 6. Qualitative information is not relevant for decision making.

___ 7. The book value of equipment generally is one of the most important factors to consider in deciding to replace the equipment.

___ 8. Only variable costs are relevant for decision making.

___ 9. An increase in total fixed costs lowers the break-even point.

___10. A company can use cost-volume-profit analysis to determine the level of sales required to earn a target profit.

___11. A restaurant that is part of a retail store would most likely be classified as an investment center.

___12. Capital investment decisions involve investments in long-term operational assets.

___13. Responsibility reports should be simple, show variances between the budgeted and actual amounts of controllable revenue and expense items, and be timely.

___14. Clear lines of authority and responsibility are essential to establishing a responsibility accounting system.