88.Companies with low operating leverage will experience lower profits when sales increase than will companies with higher operating leverage.
True False
89.A company with a completely fixed cost structure will have operating leverage of 1.
True False
90.Contribution margin represents the amount available to cover fixed expenses and then provide company profits.
True False
91.No contribution margin is provided by selling one unit of a product at a price of $35 if variable production costs are $20, variable general and administrative costs are $5, and fixed costs are $10 per unit.
True False
92.The contribution margin format income statement is
not
widely used for external financial reporting, but is allowed by GAAP.
True False
93.The contribution margin format income statement classifies costs according to their behavior patterns.
True False
94.Contribution margin can only be determined if costs are separated into product and period costs.
True False
95.If a company has both fixed and variable costs, their operating leverage will always be greater than 1.
True False
96.The higher the magnitude of a company's operating leverage, the more benefit the company will receive from a given percentage increase in revenue.
True False
97.The higher the magnitude of a company's operating leverage, the smaller the decrease in profit for a given percentage decrease in revenue.
True False