Accounting Principles 2, Test 82, Chapters 20, 21& 22 31. For CVP analysis, both variable and fixed costs are assumed to have a linear relationship within the relevant range of activity. A) True B) False 32. The high-low method is used in classifying a mixed cost into its variable and fixed elements. A) True B) False When applying the high-low method, the variable cost element of a mixed cost is calculated before the fixed cost element. A) True B) False 33. 34. Contribution margin is the amount of revenue remaining after deducting cost of goods sold A) True B) False 35. Unit contribution margin is the amount that each unit sold contributes towards the recovery of fixed costs and to income. A) True B) False 36. Both variable and fixed costs are included in calculating the contribution margin A) True B) False 37. The break-even point is where total sales equal total variable costs. A) True B) False 38. A variable cost is a cost that A) varies per unit at every level of activity B) occurs at various times during the year. C) varies in total in proportion to changes in the level of activity D) may or may not be incurred, depending on management's discretion. the level of aetivity. Page 6