Identify whether each of the following SIX statements (numbered 1 through 6) is TRUE or FALSE.

True

False

1. A differential cost is a variable cost.

2. If the number of units sold increase, the break-even point will decrease.

3. All other things the same, a decrease in variable expenses per unit will reduce the break-even point.

4. Inventories are usually the most liquid, but lowest-yielding, current asset of a firm.

5. A sunk cost is a cost that has already been incurred but that can be avoided at least in part depending on the action a manager takes.

6. At the break-even point, variable expenses and fixed expenses are equal.