BA 213 - Managerial Accounting

differential

A change in revenues between two alternatives is known as ___________ revenue or incremental revenue.

Mixed or semi-variable cost

A cost that contains both variable and fixed cost elements is called a(n)

Opportunity cost

A potential benefit that is forfeited or lost when one decision is chosen over another is called a(n) ___________________.

Sales revenue - variable costs = contribution margin

Contribution margin is _____________.

incremental, relevant, decremental or marginal costs

Differential costs are also known as

Contribution margin

Sales revenue minus all variable expenses equals ________________.

decision making

Differential costs, opportunity costs, and incremental costs are all cost classifications used in

Gross Margin of $140,000 - Total Selling & Admin. Exp. of $60,000 = $80,000.

Given: Sales of $360,000, Gross Margin of $140,000, Contribution Margin of $110,000, and Total Selling & Administrative Exp. of $60,000, net income using the traditional income statement format equals

1. traditional/GAAP 2. contribution/contribution margin

An income statement focusing on product and period costs has been prepared using a(n) ____________ format, while a(n) _________ format income statement makes a distinction between fixed and variable costs.

1. Product/Manufacturing 2. Period

On traditional income statement, cost of goods sold reports the _____________ costs attached to merchandise sold during the period, while selling and administrative expenses report all ___________ costs that have been expensed as incurred.

Should be considered in decision making Are benefits lost when choosing one option over another

Opportunity costs

Relevant Range

The assumption that cost behavior is strictly linear is reasonably valid within the ____________________ of activity.

$63,000

The following information is for S&P Enterprises for the month of September: Direct materials $82,000 Direct labor $51,000 Variable manufacturing overhead $32,000 Fixed manufacturing overhead $30,000 Variable selling expense $16,000 Fixed selling expense $15,000 Variable administrative expense $9,000 Fixed administrative expense $18,000 Total fixed costs for the month of September was $_________.

Contribution format statements make it easier to predict how decisions affect the future, traditional income statements focus on cost classifications. Contribution format statements focus on cost behavior.

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

Factory rent Administrative salaries Factory insurance

Which of the following are most likely fixed costs?

Indirect costs

Which of the following is NOT a cost classification associated with decision making?

1. Fixed costs remain constant in total and vary per unit. 2. the assumption that cost behavior is strictly linear is reasonably valid.

Within the relevant range of activity

fixed

Within the relevant range of activity, ________ costs remain constant in total.