ACCY 200 CB6a

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

Operating income Revenues Fixed expenses Variable expenses Contribution margin

Which of the following equations describes the breakeven point?

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

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

(30-21)/21=0.3 30% is answer

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 $

1000

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 $

115000

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 $

12000

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, the operating income of ABC Company will be $

30000

The following information exists for ABC Company: Sales revenue: $300,000 Contribution margin ratio: 30% Fixed expenses for the period: $60,000 Sales volume in units: 10,000 If sales revenue increases by $20,000, operating income will increase by _______?

6,000

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

False

Arrange the following items on the contribution margin income statement in the correct order.

Revenue Variable expenses Contribution Margin Fixed Expenses Operating Income

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

Sales commissions Production supplies Hourly wages

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 rate * Volume of activity)

Managerial accounting provides information for use within an organization.

True

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

The relevant range assumption relating to fixed costs refers to:

a firm's range of activity

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

actual

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

When the number of units sold is _____.

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

The relevant range assumption is about _______________ activity, and suggests that the level of fixed costs will remain constant only within certain ranges of activity.

capacity

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

cost

A traditional income statement format is organized by function, whereas a contribution margin format income statement is organized by ___________ _______________.

cost behavior

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

decision making

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

fixed

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

its breakeven point

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

planning managing controlling

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

planning and control cycle

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

From the following cost examples, identify the fixed costs.

Building depreciation Executive salaries Property taxes

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

cost behavior

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

leverage

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

margin of safety

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

operating loss will be $7,500

At breakeven point, operating income is equal to _________,

zero.