Exam 3 Personal Review

Required borrowings on a cash budget is calculated by _____

adding the desired ending cash balance to the amount of the cash deficiency

The degree of operating leverage = ______.

contribution margin ÷ net operating income

A method that uses all the available data points to divide a mixed cost into its fixed and variable components is called ______.

least-squares regression

The term used for the relative proportion in which a company's products are sold is ______.

sales mix

The break-even point occurs on the Cost-Volume-Profit graph where:

total contribution margin equals total fixed expenses.

When using Excel, the intercept (a), slope (b) and R² is determined by selecting any data point in the scattergraph plot and selecting Add _____

trendline

In a least-squares regression equation, a represents the _______ and b represents the ______

Intercept, slope

A measure of how sensitive net operating income is to a given percentage change in sales dollars is known as operating ______

Leverage

The amount by which sales can drop before losses are incurred is the ____ of _____

Margin of Safety

If sales volume increases and all other factors remain constant, then the:

Margin of Safety will increase

In a manufacturing company, the ______ budget shows the number of units that must be manufactured to satisfy sales needs and provide for the desired ending inventory.

Production

Because all other parts of the budget depend on it, if the ______ budget is inaccurate, the rest of the budget will be inaccurate.

Sales

CVP analysis focuses on how profits are affected by ______.

Selling Price, Sales Volume, Unit Variable Cost, Total Fixed Cost, Mix of Products sold

Contribution margin becomes profit after fixed expenses are covered. (T/F)

True

Break-even analysis assumes that:

Unit variable expense is constant.

The slope of the regression line represents the ______ cost per unit of activity.

Variable

The contribution margin is equal to sales minus ______.

Variable Expenses

Profit equals:

(P × Q - V × Q) - fixed expenses.

If the contribution margin is not sufficient to cover fixed expenses:

A loss occurs

The annual master budget file includes the Blank______ from last year because it is needed for the schedule of expected cash collections.

Balance Sheet

Mossfeet Shoe Corporation is a single product firm. The company is predicting that a price increase next year will not cause unit sales to decrease. What effect would this price increase have on the following items for next year?

CM Ratio increase, Break Even Point decrease

Break Even Formula

Fixed costs / contribution margin per unit

The term "cost structure" refers to the relative proportion of _____ and _____ costs in an organization

Fixed, variable