ACCT 212 Chapters 5-
$65 per order with 120
7,800
20 400
8,000
activity-based costing is NOT often used
ABC system may not conform
net operating income can be calculated as
(unit sales - units sales to break even) x unit contribution margin
contribution margin is first used to cover ___ expenses. Once the break-even point has been reached, contribution margin becomes ____
fixed, profit
to convert the formula for sales dollars required to attain a target profit to sales dollars required to break even, set the target profit to
0 dollars
750,000 and total costs of 360,000
175,000
900,000
30
when units sold exceeds units produced, net income under variable costing will generally be ___ net income under absorption costing
higher than
both ACB and traditional
income, costs, sales
once the break-even point has been reached, the sale of an additional units will lead to an increase in contribution margin that is ______ the increase in net operating income
equal to
a company has reached its break-even point when the contribution margin _____ fixed expences
equals
accumulates costs for
exactly one
abc does not conform to gaap
excludes manufacting, includes some nonman
t or f the margin of safety is the excess of break-even sales dollars over budgeted (or actual) sales dollars
false
total contribution margin equals
fixed expenses plus net operating income
when a segment is eliminated,
a traceable fixed cost will disappear and common fixed cost will remain unchanged
cost system assigns costs of unused or idle capacity to products
absorption
In abc
activity
causes consumption overhead resources
activity
relate to a single _____ measure
activity
focusing on activities to eliminate waste decreases processing time
activity-based managment
the contribution margin equals sales minus
all variable costs
define activitities, assign activity cost pools, calculate
assign cost to cost objects, prepare managment
setting up equipment, placing purchase orders, and arranging shipments to customers are all examples of __-level activities.
batch
what types of activities are performed
batch-level
contribution margin
becomes profit after fixed expenses are covered
systematic approch
benchmarking
when making a decision using incremental analysis consider the
change in sales dollars resulting specifically from the decision, and change in cost resulting specifically from the decision
to estimate the effect on profs for a planned increase in sales, multiply the increase in units sold by the unit
contribution margin
the calculation of contribution margin ratio is
contribution margin / sales
the term
cost driver
CVP is the acronym for
cost-volume-profit
what are assumptions of cost-volume-profit analysis?
costs are linear and can be accurately divided into variable and fixed elements,in multi product companies the sales market is constant
according to the CVP analysis model and assuming all else remains the same, profits would be increased by a(n)
decrease in the unit variable cost
when constructing a CVP graph, the vertical axis represents
dollars
duration
driver
when analysis of a change in profits only considers the costs and revenues that will change as the result of the decision is being made using
incremental anaylisis
activity-based costing system
may exclude, uses numerous
ABC the greater the number of activities
more costly and more accurate
transaction driver
number of bills
activities that occur regardless of
organization-sustaining
faclilty-level
organization-sustaining
how many batches are run or how many units are produced
organization-sustaining
activity-based costing uses numerous
overhead cost pools
first stage allocation
overhead costs
variable costing treats manufacturing overhead as a(n) _____ cost
period
treats organization-sustaining costs
period expenses
designing and advertising a product are all __-level activities
product
(selling price per unit x quantity sold) - (variable expense per unit x quantity sold) - fixed expenses
profit
unit- level activities
proportional to the number of units produced
ABC is for internal
reporting
overhead costs and customers
second stage
CVP analysis allows companies to easily identify the changes in profit due to changes in
selling price, volume, and costs
At the break-even point
the total revenue equals total cost and the net operating income is zero
to prepare a CVP graph, lines must be drawn representing total revenue
total expense, and total fixed expense
power to run production equipment would be a(n) __-level activity.
unit
what is needed to calculate profit?
unit contribution margin, unit sales, and total fixed costs
power to run production
unit level activity
variable expenses / sales is the calculation for the
variable expense ratio
