Question 1 An income statement prepared using the contribution margin approach can be used for both external reporting and internal use.

	True
	False

Question 2 There is a contradiction between the term fixed cost per unit and the behavior pattern implied by the term because a fixed cost per unit is not fixed.

	True
	False

Question 3 By calculating the break-even point, managers can determine how many units must be sold and how much revenue must be generated in order to avoid losing money.

	True
	False

Question 4 Total variable cost increases in direct proportion to volume.

	True
	False

Question 5 The variable cost per unit increases in direct proportion to volume.

	True
	False

Question 6 As activity increases, the fixed cost per unit increases, while the variable cost per unit remains constant.

	True
	False

Question 7 Risk refers to the possibility that sacrifices may exceed benefits.

	True
	False

Question 8 Operating leverage enables a company to convert small changes in fixed costs into dramatic changes in profitability.

	True
	False

Question 9 If a company decreases its fixed costs and increases its variable costs, it will lower both the level of risk and its potential for profits.

	True
	False

Question 10 If revenues are expected to decline, management can reduce risk of loss by shifting the cost structure from fixed to variable.

	True
	False