True or False

1. Because contribution margin is based on sales price and variable costs, the contribution margin ratio can be calculated using either the total amounts or the unit amounts.

2. Staff positions are directly involved in providing goods or services to customers.

3. Sensitivity analysis empowers managers with better information for decision making by analyzing how various business strategies will affect profits earned by the company.

4. The degree of operating leverage for Madrigal Company is 4. The actual operating income is $15,000. If the company expects a 15% increase in sales, operating income should increase by $2,250.

5. Target profit is the operating income that results when sales revenue minus variable and fixed costs equals management's profit goal.