1.

The activity level is represented by an activity index such as direct labor

hours, units of output, or sales dollars. T
2. Variable cost per unit changes as the level of activity changes. F (correction:
total VC)
3. Fixed costs remain the same in total regardless of changes in the activity
index. T
4. Within the relevant range, costs are assumed to be curvilinear. F (linear)
5. For purposes of CVP analysis, mixed costs must be classified into their fixed
and variable elements. T
6. The high-low method is a mathematical method that uses total costs incurred
at the high and low levels of activity. T
7. Under the high-low method, the variable cost per unit is computed by dividing
the change in total costs by the high minus low activity level. T
8. One assumption of CVP analysis is that changes in activity are not the only
factors that affect costs. F (are the only factors)
9. One assumption of CVP analysis is that all costs can be classified as either
variable or fixed with reasonable accuracy. T
10. The contribution margin per unit is the unit selling price less the fixed cost per
unit. F (less CVu)
11. If the contribution margin ratio is 60% and the amount of fixed costs are
400,000, then the sales dollars at the break-even point are 666,667. T
12. At the break-even point, contribution margin must equal total fixed costs. T
13. A cost-volume-profit graph shows the amount of net income or net loss at each
level of sales. T