1. Which of the following statements is FALSE:

A. Decreasing the level of operating gearing makes profits more sensitive to changes in the volume of activity.

B. The margin of safety is the extent to which the planned volume of output or sales lies above the break-even point.

C. Businesses with relatively low fixed costs compared with their variable costs are said to have low operating gearing.

D. The contribution margin per unit contributes to meeting the business fixed costs and, if there is any excess, it then contributes to profit.