COMMERCE 2AB3 Study Guide - Final Guide: Contribution Margin, Variable Cost, Alexander Kerensky

• School: McMaster University
• Department: Commerce
• Course: COMMERCE 2AB3
• Professor: Karim Karim

Document Summary

True/false: 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. Level: medium lo: 1 ans: t: incremental analysis is generally the simplest and most direct approach to decision making. Level: easy lo: 1 ans: t: to facilitate decision-making, fixed expenses should be expressed on a per-unit basis. Level: medium lo: 1 ans: f: one assumption in cvp analysis is that inventories do not change. Level: easy lo: 1 ans: t: on a cvp graph for a profitable company, the total expense line will be steeper than the total revenue line. Level: medium lo: 2 ans: f: if sales volume increases, and all other factors remain unchanged, the contribution margin ratio will decrease.