ACC - 1100 SB ch 12

If a firm has revenues of $80,000, variable expenses of $25,000, operating income of $20,000, then its contribution margin is _____ and fixed expenses is _____.

$55,000; $35,000

Which of the following equations describes the breakeven point?

>Operating income = Zero >Total revenue = Total expenses >Contribution margin = Fixed expenses

In the planning and control cycle, feedback is obtained by comparing planned activity with ________ results.

actual

The following information exists for a firm: Selling price per unit = $50. Contribution margin ratio = 30%. Fixed expenses per month = $30,000. Desired operating income = $18,000. The total revenues necessary to earn the desired operating income is $

$160,000

A firm's sales revenue amounts to $200,000, fixed expenses amount to $50,000, and variable expenses amount to $100,000. If the breakeven sales revenue is $150,000, the firm's margin of safety is ______.

$50,000

The logical sequence of activities performed in the management planning and control cycle is:

1. planning 2. managing 3. controlling

__________ accounting is focused on the future, whereas ___________ accounting is focused on the past.

Blank 1: Managerial or Management Blank 2: financial

The relevant range assumption is about the level of production _________ and suggests that the level of fixed costs will remain constant only within certain ranges of activity. Listen to the complete question

Blank 1: capacity

True or False: Cost behavior implies that people accountable for costs would react negatively to increases in the cost.

False

Using the high-low method produces a cost formula for expressing the total of a mixed cost at any level of activity, which is:

Total cost = Fixed cost + Variable cost

Contribution margin represents the amount of revenue left over after covering variable expenses from the sale of products or services available to cover fixed expenses and provide for operating income.

True

The relevant range assumption relating to fixed costs refers to:

a firm's range of activity

A cost behavior pattern describes the relationship of total cost to volume of

activity

For a cost formula to forecast the total of fixed costs and variable costs expected to be incurred, it must be based on a specific level of

activity

When a company has different products with different contribution margin ratios, the relationship of total company contribution margin to total company sales revenue is known as the __________ contribution margin ratio.

average

To calculate the volume in units at breakeven, fixed expenses are divided by the:

contribution margin per unit

In managerial accounting, the term ________ means different things depending on the situation.

cost

In managerial accounting, the term __________ means different things depending on the situation.

cost

A ______ can be used to forecast the total cost expected to be incurred at various levels of activity.

cost formula

The management activity that occurs in each phase of the planning and control cycle is:

decision making

When classifying costs for managerial accounting purposes, it is important to recognize that each cost must be viewed __________ for each planning, control, or decision-making situation.

differently

As the volume of activity changes, a(n) ___________ cost changes when expressed on a per unit basis.

fixed

As the volume of activity changes, a(n) _______ cost remains constant in total. Listen to the complete question Need help? Review these concept resources.

fixed

The principal characteristic that distinguishes managerial accounting from financial accounting is its emphasis on the

future

The higher a firm's contribution margin ratio, the greater its operating:

leverage

When analyzing variable costs, it is assumed that cost behavior pattern is _________ , but in reality, because of other factors such as economies of scale and quantity purchase discount, per unit variable costs will typically change slightly. Listen to the complete question

linear

A relative measure of risk that describes a company's current sales performance in relation to its breakeven sales is called the _____.

margin of safety

If the selling price and variable expense per unit were to drop $2 and fixed expenses remain the same, the breakeven point would __________.

remain the same

The high-low method of analyzing the cost behavior of a mixed cost uses a(n) ___________ to illustrate cost and volume data relationships.

scattergram

A firm calculates the average contribution margin ratio when _____.

the firm sells more than one product

The management process is illustrated through a series of key management activities referred to as:

the planning and control cycle

As the volume of activity changes, a(n) ________ cost changes in total.

variable

If total cost is $12,000 and total fixed cost is $4,000, then:

variable costs total $8,000

Which of the following characteristics apply to managerial accounting as opposed to financial accounting?

> Breadth of concern is on individual units of the organization plans and activities. > Time frame involved is present and future for planning and control.

Which of the following cost examples are fixed costs?

> Building depreciation > Property taxes > Executive salaries

From the following cost examples, identify those that are variable costs.

> Production supplies > Sales commissions > Hourly wages

When the number of units sold is _____.

> above the breakeven point, profit equals units sold above the breakeven point multiplied by the contribution margin per unit > below the breakeven point, loss equals each unit unsold below the breakeven point multiplied by the contribution margin per unit

Managerial accounting in contrast to financial accounting:

> is focused on the future > supports internal planning decisions

Which of the following elements are included in the contribution margin income statement format?

>Fixed expenses >Operating income >Variable expenses >Revenues

The following information exists for ABC Company: Selling price per unit: $30 Variable expenses per unit: $21 Fixed expenses for the period: $60,000 Sales volume in units: 10,000. If selling price is reduced by $2 and sales volume increases by 3,000 units, total contribution margin will increase by $

Blank 1: 1,000 or 1000

The following information exists for a firm: Selling price per unit = $50. Variable expenses = 20. Fixed expenses per month = $30,000. Desired operating income = $15,000. The volume necessary to earn the desired operating income is

Blank 1: 1,500 or 1500

A firm has revenues of $240,000, a contribution margin ratio of 30%, and fixed expenses that total $112,000. If revenues increase by $40,000, then operating income will increase by $

Blank 1: 12,000 or 12000

A firm has revenues of $240,000, a contribution margin ratio of 30%, and fixed expenses that total $112,000. If revenues increase by $40,000, then operating income will increase by $. Listen to the complete question

Blank 1: 12,000 or 12000

The following information exists for ABC Company: Selling price per unit = $60. Variable expenses per unit = $40. If ABC's breakeven point is 5,000 units and it sells 5,750 units in March, its operating income will be $

Blank 1: 15000 or 15,000

If the total cost is planned to be $12,000, the total fixed costs are $4,000, and the variable cost per unit of activity is $4, the total activity being planned for is ________ units

Blank 1: 2,000 or 2000

If ABC Company's sales revenue is $250,000, and its margin of safety is $25,000, ABC's breakeven sales revenue is $

Blank 1: 225,000 or 225000

If a firm has revenues of $50,000, variable expenses of $25,000, and fixed expenses of $10,000, then the contribution margin is $_______ and the operating income is $_________

Blank 1: 25,000 or 25000 Blank 2: 15,000 or 15000

If a firm has revenues of $50,000, variable expenses of $25,000, and fixed expenses of $10,000, then the contribution margin is $__________ and the operating income is $__________.

Blank 1: 25,000 or 25000 Blank 2: 15,000 or 15000

The following information exists for ABC Company: Selling price per unit: $30 Variable expenses per unit: $21 Fixed expenses for the period: $60,000 Sales volume in units: 10,000. If advertising of $15,000 is spent to increase sales volume by 2,000 units, operating income will increase by $

Blank 1: 3,000 or 3000

The following information exists for ABC Company: Selling price per unit: $30 Variable expenses per unit: $21 Fixed expenses for the period: $60,000 Sales volume in units: 10,000. Based on the information given above, ABC Company's contribution margin ratio will be

Blank 1: 30

Following is the information of a product of a firm: Selling price per unit = $50. Variable expense ratio = 40%. Fixed expenses per month = $30,000. The breakeven point in total revenue is $

Blank 1: 50,000 or 50000

If a firm has an operating income of $50,000, variable expenses of $30,000, and fixed expenses of $10,000, then its contribution margin is $ _________ and its revenue is $_________

Blank 1: 60,000 or 60000 Blank 2: 90,000 or 90000

Following is the information of a product of a firm: Selling price per unit = $60. Variable expenses per unit = $25. The breakeven point volume is 2,000 units. Fixed expenses per month = $

Blank 1: 70,000 or 70000

A traditional income statement format is organized by function, whereas a contribution margin format income statement is organized by __________ _________ pattern.

Blank 1: cost Blank 2: behavior

When analyzing fixed costs, a fundamental assumption about the range of activity over which the fixed cost behavior pattern exists is known as the __________ _________ assumption.

Blank 1: relevant Blank 2: range

Which of the following is a true statement about the contribution margin ratio?

It shows the portion of each sales dollar that remains after covering the variable costs.

The concept of different costs for different purposes means that costs must be viewed differently depending on the planning, control, or decision-making situation.

True

True or false: Operating leverage should inform management's decisions about whether to incur variable costs or fixed costs in its cost structure.

True

To calculate total revenues at breakeven, fixed expenses are divided by the:

contribution margin ratio

The term to describe the concept that costs increase or decrease with changes in the volume of activity is known as:

cost behavior

A company's margin of safety calculation is an indication of how closely the company is operating relative to __________.

its breakeven point

When analyzing variable costs, it is assumed that cost behavior pattern is _____________ , but in reality, because of other factors such as economies of scale and quantity purchase discount, per unit variable costs will typically change slightly.

linear

The following information exists for ABC Company: Selling price per unit = $60. Variable expenses per unit = $45. If ABC's breakeven sales revenue is $150,000 and sales revenue for April totals $140,000, then for April the company's __________.

operating loss will be $2,500

Managerial accounting provides information for:

planning, control, and decision-making

The logical sequence of the activities performed in the management planning and control cycle is:

planning, managing, controlling

The contribution margin ratio is calculated by dividing contribution margin by:

revenue

Contribution margin is defined as revenues minus:

variable expenses