Answer the following statements true (T) or false (F)
1. The terms unit contribution and contribution margin are used interchangeably.
2. Contribution margin ratio is the ratio of contribution margin to net income.
3. Because contribution margin is based on sales price and variable costs, the contribution margin ratio can be calculated using either the total amounts or the unit amounts.
4. A contribution margin income statement classifies costs by function; that is, costs are classified as either product costs or period costs.
5. Contribution margin is the amount that contributes to covering the fixed costs and then to providing operating income.
1. False
2. False
Contribution margin ratio is the contribution margin to net sales revenue.
3. True
Because contribution margin is based on sales price and variable costs, which do not
change per unit, the ratio can be calculated using either the total amounts or the unit amounts.
4. False
5. True
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