Answer the following statements true (T) or false (F)
1. Contribution margin is the difference between net sales revenue and variable costs.
2. Contribution margin is the amount that contributes to covering variable costs.
3. Steadigen Company sells two generators—Model A and Model B—for $454 per unit and $396 per unit, respectively. The variable cost of Model A is $408 per unit and of Model B is $314 per unit. If Steadigen Company's sales incentives reward sales of the goods with the highest contribution margin per unit, the sales force will be motivated to push sales of Model A more aggressively than Model B.
4. Resolute Company sells two generators—Model A and Model B—for $456 per unit and $394 per unit, respectively. The variable cost of Model A is $406 per unit and of Model B is $304 per unit. The company will generate lower revenues but a higher net income if it sells more of Model B than Model A.
5. If the sales price of Product X is $24.00 per unit and unit fixed cost is $7.50, its contribution margin per unit is $16.50.
1. True
2. False
3. False
4. True
5. False
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