I. True/False Questions 1. The variable expense per unit is S12, fixed expense per unit is S10, and the selling price per unit is $40. Then the contribution margin per unit is $30 True False 2. A company with a degree of operating leverage of 4 would expect net operating income to increase by 25% if sales increased by 25%. True False 3. At the break-even point: Sales Revenue - Total Variable expenses -Total Fixed Expenses 0 True False 4. In activity-based costing, there are a number of activity cost pools, each of which is allocated in the second state allocation using its own unique measure of activity True False 5. The production budget is typically prepared prior to the sales budget. True False 6. The master budget consists of operating and financial budgets that are interdependent. True False 7. Participative style of budgeting is the most common style of budgeting used by organizations. True False g improves the allocation of overhead costs to products by using multiple 8. Activity based costin activity rates. True False 9. In order to determine the efficiency of business operations, actual costs are compared to the Flexible Budget rather than the planning budget True False 10. All activity variances arise due solely to the difference between the level of activity assumed in the planning budget and the actual level of activity used in the flexible budget True False