1. The CVP income statement classifies costs as variable or : 1433644
1. The CVP income statement classifies costs as variable or fixed and computes a contribution margin.
2. In CVP analysis, cost includes manufacturing costs but not selling and administrative expenses.
3. When a company is in its early stages of operation, its primary goal is to generate a target net income.
4. The margin of safety tells a company how far sales can drop before it will be operating at a loss.
5. Sales mix is a measure of the percentage increase in sales from period to period.
6. Sales mix is not important to managers when different products have substantially different contribution margins.
7. The weighted-average contribution margin of all the products is computed when determining the break-even sales for a multi-product firm.
8. If Buttercup, Inc. sells two products with a sales mix of 75% : 25%, and the respective contribution margins are $80 and $240, then weighted-average unit contribution margin is $120.
9. If fixed costs are $100,000 and weighted-average unit contribution margin is $50, then the break-even point in units is 2,000 units.
10. Net income can be increased or decreased by changing the sales mix.