Accounting

When a company is involved in more than one activity in the entire value chain, it is vertically integrated.

True

Two companies with the same margin of safety in dollars will also have the same total contribution margin.

True

Variable costing net operating income is usually closer to the net cash flow of a period than is absorption costing net operating income.

True

Variable costs are always relevant costs in decisions.

False

Which of the following would be considered an operating asset in return on investment computations?

Accounts Receivable

An avoidable cost is a sunk cost that can be eliminated (in whole or in part) as a result of choosing one alternative over another.

False

For a given level of sales, a low contribution margin ratio will produce more net operating income than a high contribution margin ratio.

False

A company has two divisions, each selling several products. If segment reports are prepared for each product, the division managers' salaries should be considered as common fixed costs of the products.

True

A company with high operating leverage will experience a larger reduction in net operating income in a period of declining sales than a company with low operating leverage.

True

Absorption costing treats all manufacturing costs as product costs.

True