Answer the following statements true (T) or false (F)
1. An increase in cost (fixed cost or variable cost) tends to increase the operating breakeven point, whereas an increase in the sales price per unit will decrease the operating breakeven point.
2. The use of a dollar breakeven point is important when a firm has more than one product, especially when each product is selling at a different price.
3. The contribution margin is defined as the percent of each sales dollar that remains after satisfying fixed operating costs.
4. The breakeven point in dollars can be computed by dividing the contribution margin into the variable operating costs.
5. Due to the difficulty of allocating costs to products in a multiproduct firm, the breakeven model may fail to determine breakeven points for each product line.
1. TRUE
2. TRUE
3. FALSE
4. FALSE
5. TRUE
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