Managerial accounting Chapter 4,5,6

product vs period

product has to be going into making the product period is a variable cost excluding fixed

The costing method that treats all fixed costs as period costs is: - absorption costing. - job-order costing. - variable costing. - process costing.

variable costing

In a super variable costing income statement what would Direct Labor be considered? and why?

DL is fixed expense/cost because i have an obligation to employee that i cannot switch them on and off

A shift in the sales mix from high-margin items to low-margin items can cause total profit to ________. - decrease - increase - remain the same

Decrease

Conversion cost is composed of _______. - direct labor and manufacturing overhead - direct material and manufacturing overhead - equivalent units in ending inventory - manufacturing overhead

Direct labor and manufacturing overhead

In a super variable costing income statement what would Direct Materials be considered?

Direct material is the super variable cost/only variable cost

Which of the following statements about companies that use processing costing is false? - A processing department is an organizational unit where work is performed on a product and where materials, labor, or overhead costs are added to the product. - Costs are accumulated by department. - Raw material costs are added only to the first processing department. - A separate Work in Process account is maintained for each processing department.

Costs are accumulated by department

- Equivalent units is computed using which of the following formulas? - Equivalent units = Number of completed units x Percentage completion - Equivalent units = Number of partially completed units x Percentage completion - Equivalent units = Number of completed units x (100% Percentage completion) - Equivalent units = Number of partially completed units x (100% ÷ Percentage completion)

Equivalent units = Number of partially completed units x Percentage completion

True Or False A decrease in the number of units sold will decrease the break-even point.

False

True or False The margin of safety percentage is equal to the margin of safety in dollars divided by total contribution margin.

False

True or False The total volume in sales dollars that would be required to attain a given target profit is determined by dividing the target profit by the contribution margin ratio.

False

What is usually plotted as a horizontal line on the CVP graph? - Fixed expenses - Variable costs - Sales revenues - Break-even volume

Fixed Expenses

The difference between absorption costing net operating income and variable costing net operating income can be explained by the way these two methods account for ________. - all overhead costs - fixed overhead costs - selling and administrative expenses - variable overhead costs

Fixed overhead costs

A $2.00 increase in a product's variable expense per unit accompanied by a $2.00 increase in its selling price per unit will: - decrease the degree of operating leverage. - decrease the contribution margin. - have no effect on the break-even volume. - have no effect on the contribution margin ratio.

Have no effect on the break-even volume

If the degree of operating leverage is 4, then a one percent change in quantity sold should result in a four percent change in: - unit contribution margin. - revenue. - variable expense. - net operating income.

Net Operating Income

Which of the following would not affect the break-even point? - number of units sold - variable expense per unit - total fixed expense - selling price per unit

Number of units sold

The measure of how sensitive net operating income is to a given percentage change in dollar sales is called _______. - sensitivity leverage - operating leverage - risk leverage

Operating leverage

Sneaker Styles Company manufactures a wide variety of sneakers. Which of the following systems is most suitable for Sneaker Styles? - Job-Order Costing - Process Costing - Operation Costing - Variable Costing

Operation Costing

Which of the following statements about processing costing is false? - Process costing accumulates costs by department. - Process costing assigns departmental costs uniformly to all identical units that pass through the department during a period. - Process costing systems compute unit costs by department. - Process costing is used when a company produces a continuous flow of units that are distinguishable from one another.

Process costing is used when a company produces a continuous flow of units that are distinguishable from one another.

The profit graph is based on the following linear equation: - Profit = Unit CM x Q - Fixed Expenses. - Sales = Unit CM - Unit Variable Cost. - Profit = Unit CM x Q + Fixed Expenses. - Profit = Selling Price x Q - Unit CM x Q.

Profit = Unit CM x Q - Fixed Expenses.

The following explains contribution margin ________. - sales minus fixed cost - fixed cost minus variable cost - sales minus variable cost minus fixed cost - sales minus variable cost

Sales minus variable Cost

What is represented on the X axis of a cost-volume-profit (CVP) graph? - Sales revenue - Fixed cost - Sales volume - Variable cost

Sales volume

What does the green line in the CVP graph indicate? - Total fixed costs - Total expenses - Total variable costs - Total sales revenue

Total expenses

Break-even point is the level of sales at which ______. - total profits equals total costs - total profits exceed total costs - total revenue equals total costs - total sales equal total projections

Total revenue equals total costs

True or False The margin of safety is the amount by which sales can decrease before losses are incurred by the company.

True

Once the break-even point has been reached, net operating income will increase by the amount of the _____ for each additional unit sold. - unit contribution margin - unit selling price - variable expense per unit - fixed expense per unit

Unit Contribution margin

Break-even analysis assumes that: - Total revenue is constant. - Unit variable expense is constant. - Unit fixed expense is constant. - Selling prices must fall in order to generate more revenue.

Unit Variable expense is constant