85.One of the advantages of target costing is that it specifically considers the probable market price for the product.
True False
86.If a company is operating beyond its break-even point, sale of one more unit of product increases the company's profit by the amount of the unit contribution margin.
True False
87.An increase in total fixed costs increases the break-even point.
True False
88.In order to perform cost-volume-profit analysis, a company must be able to identify its variable and fixed costs.
True False
89.Contribution margin cannot be calculated for a service-type business, and cost-volume-profit analysis is not applicable for a company that provides services rather than selling goods.
True False
90.Preston Company sells a product whose contribution margin ratio is 20%. Assuming fixed costs don't change, incremental sales of $50,000 will generate $20,000 of additional profit.
True False
91.The accuracy of cost-volume-profit analysis is limited because it assumes a strictly linear relationship between the variables.
True False
92.Techpro has a selling price of $10 and variable costs of $6. If both the selling price and the variable costs increase by 10%, the break-even point will not change.
True False
93.Database software is especially useful for performing cost-volume-profit sensitivity analysis.
True False
94.If a company changes from a labor-intensive system that incurs significant hourly wage cost to an automated system that increases fixed cost, the total cost line on the company's cost-volume-profit graph will shift up and have a steeper slope.
True False