Accounting test 1

The difference in revenues between two alternatives is called.

Differential revenue

Using a traditional income statement what equation gives you net income

Gross margin-Total selling and admin Exp.= Net income

Which of the following are differences between the traditional and contribution format to income statements

Tradition income statements focus on cost classifications. Contribution format statements focus on cost behavior. Compared to traditional statements, contribution format statements provide management with a tool to make decision making easier.

The Hight-Low Method

is based on periods where the activity tends to be unusual Uses only two data points

when using the high low method, the change in cost divided by the change in units equals

the variable cost per unit