exam 2 accounting Pearson

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- Available capacity - reduced sales price can cover incremental costs of filling order - extra fixed costs

Concepts a manager should consider when implementing a special order are __________

(sales revenue X contribution margin ratio) - fixed costs

How can a manager forecast operating income?

R-square statistic

How well a regression line fits the data points is illustrated by the ____________________

Higher than variable costing

Product cost under absorption costing is ________________

original old machine cost

Rachel's Automotive Service may need to replace a diagnostic machine which is currently used in the production process. The managerial accountant reported the information listed below. Which of the following costs is irrelevant to the replacement decision? -Original purchase cost -Remaining useful life in years -Current age in years -Book value -Current disposal value in cash -Future disposal value in cash in 5 years -Annual cash operating costs

Committed fixed cost

A fixed cost expense that management has little or no control over in the short run is a _______________

DM, DL, VOH, FOH

A unit of product under absorption costing includes ___________

is expected future data and differs amongst the alternatives

relevant information _______________

Breakeven point

step 4 of the CVP graph represents the _____

fixed over a small range of activity and then jump to a new fixed level with moderately small changes in volume

step costs are ______________

regression line fit of the data points

the R-square statistic is often referred to as a "goodness of fit" statistic because it describes the ___________

Contribution margin ratio

the __________ is computed as the total contribution margin divided by the total sales

margin of safety

the __________ is the excess of actual or expected sales over breakeven sales.

operating leverage

the __________ refers to a company's amount of relative fixed and variable costs

Sales mix

the _____________ is the combination of products that make up total sales

segment margin income statement

the ______________ contains NO allocation of common fixed costs

Is the excess of sales revenue over variable expenses

the contribution margin ____________.

refers to a companies amount of relative fixed and variable costs

the operating leverage _______________

Total fixed costs

the vertical axis on a graph plots __________

can be used for a company that sells more than one product

the weighted-average contribution margin __________

graphs of variable costs began at the point that represents zero volume and zero costs

which of the following is a TRUE statement about the graphing of variable costs?

constraint limits assemble or sale of a product

which of the following is true about constraints

Total variable costs

which of the following types of costs would remain constant on a per-unit basis?

The scatterplot is a graph of the historical cost data on the x-axis and volume data on the y-axis

which of these is a FALSE statement about a scatterplot?

Fixed factory overhead is necessary to produce a product

which of these is an argument against the use of variable costing?

a special order occurs when a customer requests a one-time order at a reduction in the sales price

True about a special order

Direct costing

Variable costing is also known as _________

Greater than the net operating income reported under absorption costing

When sales exceed production, the net operating income reported under variable costing is ________________

companies that sell more than one product should NOT consider their sales mix when performing CVP analysis

Which of the following is NOT true regarding the sales mix?

A manager uses sensitivity analysis to determine the impact of changes to the sales price and volume

Which of the following statements is TRUE about sensitivity analysis?

occurs when a customer requests a one-time order at a reduction in the sales price

a special order __________

a method to determine cost behavior that is based on a manager's judgment in classifying each general ledger account as a variable, fixed, or mixed cost

account analysis is _____________

include costs that may be eliminated as a result of discounting the product

avoidable fixed costs _________

starts with the product's total costs and adds a desired profit to determine a cost -plus price

cost - plus pricing ___________

refers to a company having work performed overseas

offshoring ______________

a change in fixed costs does not affect the contribution margin

how might a change in fixed costs affect the contribution margin

Operating income

(sales revenue X contribution margin ratio) - fixed costs represents which of the following?

its simplicity

An advantage of account analysis is __________

expresses the relationships amongst costs, volume, and organizational profits

CVP analysis _____________

Mixed costs

_____ contain both variable and fixed cost components

offshoring

______ refers to a company having work performed overseas

Variable production costs

_______ are treated as product costs under the variable costing method

Advertising

_________ is an example of a discretionary fixed cost expense

Property taxes on company owned real estate

__________ is/are an example of committed fixed cost expense

unavoidable fixed costs

___________ include fixed costs that continue to be incurred even if the product line is discontinued

segment margin income

___________ refers to the result of operating income or loss for each individual product line

total fixed costs

____________ stay constant over a wide range of volume

sunk

a __________ cost includes costs that have been incurred in the past and cannot be changed

is a cost over which management has little or no control in the short run

a committed fixed cost ______________

the extra revenue is greater than the extra cost to continue manufacturing a product

a managerial accountant needs to make a sell or continue to process decisions about a product. the managerial accountant should continue manufacturing the product instead of selling the product if ____________

positive correlation

a scatterplot can indicate a _______________

contains NO allocation of common fixed costs on the statement

a segment margin income statement______________

Variable profit

contribution margin is also known as __________

vary in direct proportion to changes in volume

total variable costs _________________

DM, DL, VOH

under variable costing, a unit of production includes ______________

the horizontal x-axis on the CVP graph represents _______________

volume of units

-product lacks uniqueness -not a name brand -heavy competition

what are characteristics of a price taker

-an outsourcing decision can help a manager concentrate on core competencies at the workplace -outsourcing can reduce risks associated with investing in capacity infrastructure -outsourcing can be a lower cost alternative

what are the benefits of outsourcing

25% increase

what is the most likely change to total variable costs if a manager increases the production of a product by 25%?

Fixed costs

what type of costs are more important to consider when the new manager plans to lower the charges to customers?

greater than net operating income reported under variable costing

when production exceeds sales, the net operating income reported under absorption costing is _________

the special reduced sales price is high enough to cover the incremental costs of filling the order

when should a manager accept a special order job

Revenues over variable costs

when using a variable costing system, the contribution margin (CM) is cascaded as the excess of ___________

contraction margin per unit X units per constraint

which of the following choices represents the computation of contribution margin per unit of a constraint

y = vx

which of the following equations best expresses the straight line equation for a variable cost equation when f is zero?

heavy competition

which of the following is NOT a characteristic of a price-setter?

available capacity

which of the following is a TRUE concept about what a manager should consider when a customer requests a one-time special order?


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