1. To estimate what the profit will be at various levels of activity, a manager can simply take the number of units to be sold over the break-even point and multiply that number by the unit contribution margin.
2. Incremental analysis is generally the simplest and most direct approach to decision making.
3. To facilitate decision-making, fixed expenses should be expressed on a per-unit basis.
4. One assumption in CVP analysis is that inventories do not change.
5. On a CVP graph for a profitable company, the total expense line will be steeper than the total revenue line.
- To estimate what the profit will be at various levels of activity, a manager can simply take the number of units to be sold over the break-even point and multiply that number by the unit contribution margin.
Ans: True
- Incremental analysis is generally the simplest and most direct approach to decision making.
Ans: True
- To facilitate decision-making, fixed expenses should be expressed on a per-unit basis.
L Ans: False
- One assumption in CVP analysis is that inventories do not change.
1 Ans: True
- On a CVP graph for a profitable company, the total expense line will be steeper than the total revenue line.
Ans: False
