accounting 2 test 3
sunk costs
In a decision to retain or replace equipment, the book value of the old equipment is a(an):
c
In a retain or replace equipment decision, all of the following are considered except the: A) cost of the new asset. B) salvage value of the old asset. C) book value of the old asset. D) decrease in variable manufacturing costs
sunk costs
In a sell or process further decision, joint costs are:
240000
Panera Bread sells a box of bagels for $6 with a contribution margin of 62.5%. Its fixed costs are $150,000 per year. How much sales in dollars does Panera Bread need to break-even per year if bagels are its only product?
variable manufacturing overhead, direct labor, direct materials.
Relevant costs in accepting an order at a special price include:
900000
Walden Company expects to sell 500,000 units for $6 per unit. The contribution margin ratio is 30%. If Walden will break even at this level of sales, fixed costs are
high low method
$ H-L/ H-L activity
total fc
1 1................. 1 111111111 (fc)
vc per unit
1 1.................. 1 1111111111 (vc)
total vc
1 . 1 . 1 . 11111111111
fc per unit
1. 1 . 1 . . 1 . . . . 11111111111
c
An example of a mixed cost is: A) direct materials. B) supervisory salaries. C) utility costs. D) property taxes.
outsourcing
Another name for the option to buy a component from a supplier is
mixed costs
costs that change in total but not proportionately with changes in the activity level
fixed costs
costs that remain the same in total regardless of changes in the activity level
variable costs
costs that remain the same per unit at every level of activity.
mixed costs
costs that vary as activity level changes, but they do not stay the same per unit like variable costs
incremental analysis
is the process of identifying the financial data that change under alternative courses of action.
a
Why is determination of a relevant range important? A) Cost behavior outside the relevant range may be distorted. B) Costs outside this range cause losses to companies. C) Costs that occur outside this range are assumed to be linear. D) Most companies operate at 100% of capacity.
margin of safety
computed as actual sales - break-even sales
margin of safety ratio
computed by dividing margin of safety in dollars by actual sales.
variable costs
dm, dl, and remain the same per unit at every level of activity
when an unprofitable segment is eliminated
fixed expenses allocated to the eliminated segment will have to be absorbed by other segments when?
relevant costs
in incremental analysis, the only costs to be considered are:
contribution margin
the amount of revenue remaining after deducting variable costs.
relevant range
the range over which the company expects fixed costs to remain the same.
cost behavior analysis
the study of how specific costs respond to changes the level of business activity
