Chapter 12 + 16S ACCY

Activities included in a generally accepted definition of the management process include: A. Planning, organizing, controlling. B. Planning, operating, reporting. C. Preparing, operating, creating. D. Preparing, organizing, converting. E. none of these

A

Relevant costs in decision-making: A. are future costs that represent differences between decision alternatives. B. result from past decisions. C. should not influence the decision. D. none of the answers are correct.

A

The contribution margin format income statement: A. uses a behavior pattern classification for costs rather than a functional cost classification approach. B. emphasizes that all costs change in proportion to any change in revenues. C. is most frequently used for financial statement reporting purposes. D. results in a larger amount of operating income than the traditional income statement format.

A

The management activity that occurs in each phase of the planning and control cycle is: A. decision making B. controlling C. planning D. managing

A

When the high-low method of estimating a cost behavior pattern is used: A. cost and volume data must be reviewed for outliers. B. the highest and lowest sales price and volume amounts are used in the calculation. C. the resulting cost formula will explain total cost accurately for every value between the high and low volumes. D. the direct result of the high-low calculations is the fixed expense amount.

A

Which of the following will increase a company's break-even point? A. Increasing variable cost per unit. B. decreasing variable cost per unit. C. Reducing total fixed costs. D. Increasing selling price per unit. E. Increasing contribution margin per unit.

A

Which of the following describes breakeven point? A. operating income = 0 B. total revenue = contribution margin C. contribution margin = fixed expenses D. operating income = total revenue E. contribution margin = variable expenses F. total revenue = total expenses

A, C, F

As the level of activity decreases: A. fixed cost per unit decreases B. fixed cost remains constant in total C. variable cost per unit decreases D. variable cost remains constant in total

B

At the break-even point: A. Fixed cost is always less than the contribution margin. B. Fixed cost is always equal to the contribution margin. C. Fixed cost is always more than the contribution margin. D. Fixed cost is always more than variable cost. E. Fixed cost is always equal to variable cost.

B

The decision for solving production mix problems involving multiple products and scarce production resources should focus on: A. gross profit of each product. B. contribution margin per unit of scarce resource. C. contribution margin of each product. D. sales price of each product.

B

The scattergram allows cost-volume relationships to be visually scanned for outlier observations that should be: A. included in the calculation of the fixed cost component of the mixed cost. B. ignored in the calculation of the cost formula of a mixed cost. C. included in the calculation of the cost formula of a mixed cost. D. included in the calculation of the variable rate component of the mixed cost.

B

Identify fixed costs: A. production labor wages B. building depreciation C. property taxes D. shipping costs E. bonus compensation based on volume of sales F. executive salaries

B,C,F

Managerial accounting can best be described as: A. meeting the requirements of generally accepted accounting principles. B. the preparation and distribution of the corporate tax return. C. the preparation and use of accounting information within the organization. D. the preparation and distribution of the financial statements.

C

Managerial accounting, as opposed to financial accounting, is primarily concerned with: A. The financial condition of the organization as a whole. B. Meeting the requirements of generally accepted accounting principles. C. Emphasizing the future. D. Providing data for investors and creditors. E. Determining exact results.

C

The higher a firm's contribution margin ratio, the greater its operating: A. income B. loss C. leverage D. expenses

C

The logical sequence of the activities performed in the management planning and control cycle is: A. controlling, managing, planning B. managing, planning, controlling C. planning, managing, controlling D. planning, controlling, managing

C

When the number of units sold is: (two are correct) A.below the breakeven point, profit equals each unit sold below the breakeven point multiplied by the contribution margin per unit. B. above the breakeven point, loss equals each unit sold below the breakeven point multiplied by the contribution margin per unit. C. below the breakeven point, loss equals each unit unsold below the breakeven point multiplied by the contribution margin per unit. D. above the breakeven point, profit equals units sold above the breakeven point multiplied by the contribution margin per unit.

C, D

A firm calculates the average contribution margin ratio when: A. firm incurs more expenses than revenues B. firm's going concern becomes an issue C. firm's average revenue is more than the total Current liabilities D. firm sells more than one product

D

An example of a cost likely to have a fixed behavior pattern is: A. sales force commission B. electricity cost for packaging equipment C. production labor wages D. advertising cost

D

Cost behavior refers to: A. costs that are both good and bad B. costs that increase at a quicker rate than others C. costs that decrease at a quicker rate than others D. costs that are variable or fixed E. none of the above

D

The concept of operating leverage refers to which of the following? A. Operating income changes proportionately less than income for any given change in activity level. B. Operating income changes proportionately more than income for any given change in activity level. C. Operating income changes proportionately less than revenues for any given change in activity level. D. Operating income changes proportionately more than revenues for any given change in activity level.

D

The relevant range concept refers to: A. A firm's range of profitability. B. A firm's range of sales. C. A firm's range of rates of return. D. A firm's range of activity. E. A firm's range of expenses.

D

Which are included in the contribution margin income statement format? A. COGS B. Gross profit C. Operating Expenses D. Revenues E. Contribution Margin F. Operating Income G. Fixed Expenses H. Variable Expenses

D,E,F,G,H

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

True

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

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

be the same