exam 2 accounting Pearson
- Available capacity - reduced sales price can cover incremental costs of filling order - extra fixed costs
Concepts a manager should consider when implementing a special order are __________
(sales revenue X contribution margin ratio) - fixed costs
How can a manager forecast operating income?
R-square statistic
How well a regression line fits the data points is illustrated by the ____________________
Higher than variable costing
Product cost under absorption costing is ________________
original old machine cost
Rachel's Automotive Service may need to replace a diagnostic machine which is currently used in the production process. The managerial accountant reported the information listed below. Which of the following costs is irrelevant to the replacement decision? -Original purchase cost -Remaining useful life in years -Current age in years -Book value -Current disposal value in cash -Future disposal value in cash in 5 years -Annual cash operating costs
Committed fixed cost
A fixed cost expense that management has little or no control over in the short run is a _______________
DM, DL, VOH, FOH
A unit of product under absorption costing includes ___________
is expected future data and differs amongst the alternatives
relevant information _______________
Breakeven point
step 4 of the CVP graph represents the _____
fixed over a small range of activity and then jump to a new fixed level with moderately small changes in volume
step costs are ______________
regression line fit of the data points
the R-square statistic is often referred to as a "goodness of fit" statistic because it describes the ___________
Contribution margin ratio
the __________ is computed as the total contribution margin divided by the total sales
margin of safety
the __________ is the excess of actual or expected sales over breakeven sales.
operating leverage
the __________ refers to a company's amount of relative fixed and variable costs
Sales mix
the _____________ is the combination of products that make up total sales
segment margin income statement
the ______________ contains NO allocation of common fixed costs
Is the excess of sales revenue over variable expenses
the contribution margin ____________.
refers to a companies amount of relative fixed and variable costs
the operating leverage _______________
Total fixed costs
the vertical axis on a graph plots __________
can be used for a company that sells more than one product
the weighted-average contribution margin __________
graphs of variable costs began at the point that represents zero volume and zero costs
which of the following is a TRUE statement about the graphing of variable costs?
constraint limits assemble or sale of a product
which of the following is true about constraints
Total variable costs
which of the following types of costs would remain constant on a per-unit basis?
The scatterplot is a graph of the historical cost data on the x-axis and volume data on the y-axis
which of these is a FALSE statement about a scatterplot?
Fixed factory overhead is necessary to produce a product
which of these is an argument against the use of variable costing?
a special order occurs when a customer requests a one-time order at a reduction in the sales price
True about a special order
Direct costing
Variable costing is also known as _________
Greater than the net operating income reported under absorption costing
When sales exceed production, the net operating income reported under variable costing is ________________
companies that sell more than one product should NOT consider their sales mix when performing CVP analysis
Which of the following is NOT true regarding the sales mix?
A manager uses sensitivity analysis to determine the impact of changes to the sales price and volume
Which of the following statements is TRUE about sensitivity analysis?
occurs when a customer requests a one-time order at a reduction in the sales price
a special order __________
a method to determine cost behavior that is based on a manager's judgment in classifying each general ledger account as a variable, fixed, or mixed cost
account analysis is _____________
include costs that may be eliminated as a result of discounting the product
avoidable fixed costs _________
starts with the product's total costs and adds a desired profit to determine a cost -plus price
cost - plus pricing ___________
refers to a company having work performed overseas
offshoring ______________
a change in fixed costs does not affect the contribution margin
how might a change in fixed costs affect the contribution margin
Operating income
(sales revenue X contribution margin ratio) - fixed costs represents which of the following?
its simplicity
An advantage of account analysis is __________
expresses the relationships amongst costs, volume, and organizational profits
CVP analysis _____________
Mixed costs
_____ contain both variable and fixed cost components
offshoring
______ refers to a company having work performed overseas
Variable production costs
_______ are treated as product costs under the variable costing method
Advertising
_________ is an example of a discretionary fixed cost expense
Property taxes on company owned real estate
__________ is/are an example of committed fixed cost expense
unavoidable fixed costs
___________ include fixed costs that continue to be incurred even if the product line is discontinued
segment margin income
___________ refers to the result of operating income or loss for each individual product line
total fixed costs
____________ stay constant over a wide range of volume
sunk
a __________ cost includes costs that have been incurred in the past and cannot be changed
is a cost over which management has little or no control in the short run
a committed fixed cost ______________
the extra revenue is greater than the extra cost to continue manufacturing a product
a managerial accountant needs to make a sell or continue to process decisions about a product. the managerial accountant should continue manufacturing the product instead of selling the product if ____________
positive correlation
a scatterplot can indicate a _______________
contains NO allocation of common fixed costs on the statement
a segment margin income statement______________
Variable profit
contribution margin is also known as __________
vary in direct proportion to changes in volume
total variable costs _________________
DM, DL, VOH
under variable costing, a unit of production includes ______________
the horizontal x-axis on the CVP graph represents _______________
volume of units
-product lacks uniqueness -not a name brand -heavy competition
what are characteristics of a price taker
-an outsourcing decision can help a manager concentrate on core competencies at the workplace -outsourcing can reduce risks associated with investing in capacity infrastructure -outsourcing can be a lower cost alternative
what are the benefits of outsourcing
25% increase
what is the most likely change to total variable costs if a manager increases the production of a product by 25%?
Fixed costs
what type of costs are more important to consider when the new manager plans to lower the charges to customers?
greater than net operating income reported under variable costing
when production exceeds sales, the net operating income reported under absorption costing is _________
the special reduced sales price is high enough to cover the incremental costs of filling the order
when should a manager accept a special order job
Revenues over variable costs
when using a variable costing system, the contribution margin (CM) is cascaded as the excess of ___________
contraction margin per unit X units per constraint
which of the following choices represents the computation of contribution margin per unit of a constraint
y = vx
which of the following equations best expresses the straight line equation for a variable cost equation when f is zero?
heavy competition
which of the following is NOT a characteristic of a price-setter?
available capacity
which of the following is a TRUE concept about what a manager should consider when a customer requests a one-time special order?
