accounting topic 4

Which of the following are considered variable costs? ...property taxes ...executive salaries ...building depreciation ... maintenance materials ... sales commissions

... maintenance materials ... sales commissions

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

Which of the following cost examples are fixed costs? ...property taxes ...executive salaries ...building depreciation ... maintenance materials ... sales commissions

...property taxes ...executive salaries ...building depreciation

Identify the relationships that the expanded contribution margin model shows

...revenue minus variable expenses is equal to contribution margin ...total contribution margin depends on the volume of activity ...contribution margin divided by revenue is equal to contribution margin ratio ...contribution margin must cover fixed expenses before an operating income is earned

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

...revenues ...operating income ...fixed expenses ...variable expenses

MANAGERIAL ACCOUNTING (FUTURE OR PAST)

FUTURE

For a cost formula to forecast the total of fixed costs and variable costs expected to be incurred, it must be based on a specific level of

activity

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

revenues minus variable expenses equals

contribution margin

fixed or variable cost : supervisory salaries

fixed

Which of the following is responsible for the fact that operating income changes to a greater degree than revenue when there is a change in the volume of activity?

fixed expenses

The expanded contribution margin model provides a structure for explaining the effect on operating income of changes in:

...variable expenses ...selling price ...the volume of activity ... fixed expenses

at the breakeven point, operating income is equal to _____

0

FINANCIAL ACCOUNTING (FUTURE OR PAST)

PAST

Which of the following best describes the management process?

The process of steering an organization's activities to best support its goals

How can a company eliminate the need to be concerned about changes in the sales mix?

by having a similar contribution margin ratio for all of its products

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

capacity

In managerial accounting, control is achieved by:

comparing planned activity to actual performance results

To calculate the volume in units at breakeven, fixed expenses are divided by the:

contribution margin per unit

To calculate total revenues at breakeven, fixed expenses are divided by the:

contribution margin ratio

A traditional income statement format is organized by function, whereas a contribution margin format income statement is organized by _________________pattern

cost behavior

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

cost behavior

______ can be used to forecast the total cost expected to be incurred at various levels of activity.

cost formula

As the volume of activity increases, fixed costs____ when expressed on a per unit baes

decrease

Cost behavior implies that people accountable for costs would react negatively to increases in the cost. (true or false)

false

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

fixed

When classifying costs for managerial accounting purposes, it is important to recognize that each cost must be viewed Blank

for each planning, control, or decision-making situation. ... differently

The principal characteristic that distinguishes managerial accounting from financial accounting is its emphasis on the

future

When a firm's sales mix includes products that range in quality, the highest quality products will have which of the following?

higher contribution margin ratios

Managerial accounting helps support what kind of planning decisions made by an entity's management?

internal forward- looking decisions

Which of the following is a true statement about the contribution margin ratio?

it shows the portion of each sales dollar that remains after covering the variable costs

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

its breakeven point

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

leverage

When analyzing variable costs, it is assumed that cost behavior pattern is ___________ but in reality because of other factors such as economies of scale and quantity purchase discount per unit variable costs will typically change slightly

linear

The simplifying assumption made when using variable cost behavior pattern data is:

linearity

A relative measure of risk that describes a company's current sales performance in relation to its breakeven sales is called the Blank ______.

margin of safety

another term used to describe a semi variable cost behavior pattern is:

mixed cost

What is the term for the magnifying effect a change in revenue has on operating income?

operating leverage

The need for management accountants to have a breadth of knowledge and interest about the organization and its operating environment in order to support planning, control, and decision making also suggests:

people in other functional areas of the organization should have a general understanding of managerial accounting

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

planning, managing, controlling

The linearity assumption suggests that the cost behavior pattern will graph as a straight line within the

relevant range

When analyzing fixed costs, a fundamental assumption about the range of activity over which the fixed cost behavior pattern exists is known as the

relevant range

as the volume of an activity increases, fixed costs (constant, increase, or decrease)

remain constant in total

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

remain the same

The contribution margin ratio is calculated by dividing contribution margin by

revenue

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 ration when ___

the firm sells more than one product

Expressing a fixed cost on a per unit basis of activity is misleading because:

the fixed cost per unit decreases as the activity increases

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 cost

The indifference point is found between alternative cost structures when Blank ______ are equal for both alternatives.

total costs

Contribution margin represents the amount of revenue left over after covering variable expenses from the sale of products or services available to cover fixed expenses and provide for operating income. ( true or false )

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 or false )

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

As the volume of activity changes a(n) _______ cost remains constant when expressed on a per unit basis

variable

fixed or variable cost ...production supplies ...sales commissions ...hourly wages

variable cost

Contribution margin is defined as revenues minus:

variable expenses