State TRUE or FALSE A fixed cost changes in direct proportion to changes in a cost driver. 1. 2. The break-even point may be reduced by increasing the per unit variable cost. Committed fixed costs usually arise from the possession of facilities, equipment, and basic organization Generally, companies that spend heavily for advertising are willing to do so because they have low contribution-margin percentages. 5. An industry that has a high contribution-margin percentage is the airlines. 6. Highly leveraged companies are less risky than companies with low leverage. 7. The margin of safety shows how far sales can fall below the planned level of sales before losses occur 8. If the contribution margin is $45,000 at the break even point, the fixed costs must be $45,000 9. If the current level of sales if $450,000 and the break-even point is $300,000, the margin of safety is 50%. 10. If the degree of operating leverage is 1.5,then a 10% increase in sales (within the relevant range of operations) will result in a 150% increase in income