Instructions: Designate whether each of the following statements dealing with the process cost accounts and cost-volume-profit relationship is true or false. T=True and F=False.

T or F 1. Contribution margin is the amount of revenue left over to cover selling and administrative costs after manufacturing costs have been deducted.

T or F 2. The method of assigning costs is essentially the same in job order and process cost accounting.

T or F 3. The flow of costs is essentially the same in job order and process cost accounting.

T or F 4. In activity-based costing (ABC), the cost of a product is equal to the sum of the costs of all activities performed to manufacture it.

T or F 5. A cost reconciliation schedule is prepared to assign total costs to units transferred out and in ending work in process.

T or F 6. The margin of safety is the difference between actual sales and target net income sales.

T or F 7. Manufacturing costs in beginning work in process are ignored in computing the cost of units transferred out and the cost of ending work in process.

T or F 8. A contribution format income statement classifies costs by function, but a traditional income statement classifies costs by cost behavior (variable or fixed).

T or F 9. A companys break-even point can be decreased by increasing the contribution margin ratio.

T or F 10. At the break-even point, total contribution margin is equal to total fixed costs.