Accy 200 exam 2 SBs

Which of the following equations describes the breakeven point? Operating income = Total revenues Contribution margin = Variable expenses Operating income = Zero Contribution margin = Fixed expenses Total revenue = Contribution margin Total revenue = Total expenses

Operating income = Zero Contribution margin = Fixed expenses Total revenue = Total expenses

In capital budgeting, the present value of future cash flows from an investment is determined by using the appropriate _ rate.

discount

The following information exists for ABC Company: Selling price per unit = $60 Variable expenses per unit = $40 If ABC's breakeven point is 5,000 units and it sells 5,750 units in March, its operating income will be

15,000

Which of the following statements is true regarding the working capital calculation? Accounts payable are included in current liabilities. Wages payable are included in current assets. Accounts payable are included in the denominator. Accounts receivable are included in current assets.

Accounts payable are included in current liabilities. Accounts receivable are included in current assets.

T/F: Cost behavior implies that people accountable for costs would react negatively to increases in the cost.

F

T/F: Managerial accounting provides information for use within an organization.

T

Which of the following statements is true regarding the acid-test ratio? The acid-test ratio can be calculated as current assets minus merchandise inventory minus current liabilities. The acid-test ratio excludes merchandise inventory from the numerator. The acid-test ratio is a more conservative measure of liquidity than is the current ratio. The acid-test ratio uses the same denominator as does the current ratio.

The acid-test ratio excludes merchandise inventory from the numerator. The acid-test ratio is a more conservative measure of liquidity than is the current ratio. The acid-test ratio uses the same denominator as does the current ratio.

When analyzing capital expenditures, the time value of money concept implies: a dollar received today is worth more than a dollar received five years from today the value of money is timeless a dollar received today is worth the same as dollar received five years from today a dollar received today is worth less than a dollar received five years from today

a dollar received today is worth more than a dollar received five years from today

The relevant range assumption relating to fixed costs refers to: a firm's range of profitability a firm's range of rates of return a firm's range of sales a firm's range of activity

a firm's range of activity

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

When analyzing capital expenditure decisions, the key factor used to equate the value of money over varying lengths of time is: annual profit margin compound interest international exchange rates cumulative net income

compound interest

When considering the decision for solving product mix problems involving multiple products and scarce production resources, the decision should focus on: operating income of each product variable and fixed cost of each product contribution margin of each product contribution margin per unit of scarce resource

contribution margin per unit of scarce resource

In managerial accounting, the term _ means different things depending on the situation.

cost

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

cost behavior

The principal (advantage/disadvantage) of the accounting rate of return method for evaluating proposed capital investments is that it (considers/ignores) the time value of money.

disadvantage, ignore

The principal (advantage/disadvantage) of the payback method for evaluating proposed capital investments is that it (considers/ignores) the time value of money.

disadvantage, ignore

As the volume of activity changes, a(n) _ (variable/fixed) cost changes when expressed on a per unit basis.

fixed

Trend analysis of ratios: involves the comparison of an individual company's ratio with the comparable industry average is a meaningful comparison despite the use of different financial accounting alternatives to develop the data used in the ratios is simply the relationship between two numbers is not usually very meaningful because the definitions of the ratio components are always changing

is a meaningful comparison despite the use of different financial accounting alternatives to develop the data used in the ratios

Beta and Gama Inc. produces a product that currently sells for $250 per unit. Current production costs per unit includes direct materials of $30, direct labor of $25, variable overhead of $15, fixed overhead of $20, and total production costs of $90. Beta and Gama Inc. has received a special pricing offer from a nonprofit organization to buy 1,000 units at $200 per unit. Beta and Gama Inc. is currently operating at its full production capacity. Based on the scenario, Beta and Gama Inc. should _____. not accept the special order as the company will lose $50,000 if it accepts the special order not accept the special order as the company will lose $20,000 if it accepts the special order accept the special order as the company will earn a profit of $200,000 if it accepts the special order accept the special order as the company will earn a profit of $100,000 if it accepts the special order

not accept the special order as the company will lose $50,000 if it accepts the special order Reason: Per unit the company will lose = $250 - $200 = $50 per unit For 1,000 units, the company will lose = 1,000 units × $50 per unit = $50,000

An organization's _ (operating/capital) budget reflects its plans to achieve short-term profitability goals, while the organization's _ (operating/capital) budget reflects its plans to achieve long-term profitability goals.

operating, capital

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

planning, managing, controlling

Sometimes when management decisions are reached, the investment project with the highest NPV or IRR is not selected because (qualitative/quantitative) factors override (qualitative/quantitative) analysis.

qual, quant

After the results of a present value analysis has been obtained for a capital investment opportunity, overriding _ factors should also be considered before a final decision is made.

qualitative

Liquidity: refers to a firm's ability to meet its current obligations as they become due. represents the obligations that are expected to be paid within a year. represents cash and other assets that are likely to be converted to cash within a year. is measured by relating current assets and current liabilities as reported on the balance sheet.

refers to a firm's ability to meet its current obligations as they become due. is measured by relating current assets and current liabilities as reported on the balance sheet.

When considering the product mix decision and the allocation of scarce production capacity resources, the objective is to maximize contribution margin in terms of the _

scarce resource

The discount rate used in the present value calculations of a capital budgeting expenditure decision is known as: the return on equity the cost of capital the return on liabilities the cost of cash inflow

the cost of capital

As the volume of activity changes, a(n) _ (variable/fixed) cost changes in total.

variable

With a semilogarithmic graph, the _ scale is logarithmic.

vertical

At the breakeven point, operating income is equal to _

zero