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Which of the following statements about cost-volume-profit analysis is true? To increase the contribution margin ratio, a man
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4. At the breakeven point, total sales revenue equals total cost.

The breakeven point is a level of production at which total cost will equal total sales revenue. At the breakeven point, there will be no loss and no profit.

1. The contribution margin is the difference between sales and variable cost, it has nothing to do with the fixed cost. To increase the contribution margin you can either decrease total variable cost or increase the selling price per unit.

2. The contribution margin ratio represents the percentage of sales revenue available to contribute towards covering the fixed cost. The contribution margin is sales less variable cost.

3. If a company expands operation outside of its relevant range, variable cost per unit and total fixed cost will be constant. Variable cost per unit is constant but the total variable cost is not constant and the total fixed cost is constant but per-unit fixed cost is not constant.

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