In a CVP income statement, a selling expense is generally.. partly a variable cost and partly a fixed cost. A company with a
higher contribution margin ratio is more sensitive to changes in sales revenue Cost-volume-profit analysis is the study of the effects of changes in costs and volume on a company’s
profit. Contribution margin is the amount of revenue remaining after deducting How The degree of operating leverage is computed by dividing total contribution margin by net income. What is the contribution margin ratio contribution margin divided by sales. How do you find the Margin of safety in dollars? Expected sales less break-even sales. True or false The CVP income statement classifies costs AS WHAT? as variable or fixed and computes contribution margin. Changes in activity have a(n) _________ effect on fixed costs per unit. If Qualls Quality Airline cuts its domestic fares by 30% Answers: a profit can be earned either by increasing the number of passengers or by decreasing variable costs. Which one of the following is not an assumption of CVP analysis? Answers: All costs are variable costs. Sales mix remains constant. The behavior of costs and revenues are linear within the relevant range. All costs are variable costs. A cost which remains constant per unit at various levels of activity is a A CVP graph does not include a.. The break-even point is where contribution margin equals total fixed costs. Which of the following is not a mixed cost? Answers: Which of the following is not true about the graph of a mixed cost? Answers: The variable cost portion of the graph is rectangular in shape. If the activity level increases 10%, total variable costs will a variable element and a fixed element. Within the relevant range, the variable cost per unit Answers: remains constant at each activity level. CVP analysis does not consider Answers: Activity-based costing is used by Answers: Companies that switch to ABC often find they have Answers: Which of the following is not a benefit of activity-based costing? Answers: Which of the following is a limitation of activity-based costing? Answers: Some arbitrary allocations continue The presence of any of the following factors would suggest a switch to ABC except when Answers: production managers are using data provided by the existing system Which would be an appropriate cost driver for the ordering and receiving activity cost pool? Answers: Each of the following is a limitation of activity-based costing except that Answers: An activity that has a direct cause-effect relationship with the resources consumed is a(n) Answers: Which of the following is a unit-level activity? Answers: Which of the following is a value-added activity? Answers: Which of the following is a non-value-added activity? Answers: The last step in activity-based costing is to Answers: assign overhead costs to products, using overhead rates determined for each cost pool. If the amount of "Cost of goods manufactured" during a period exceeds the "Total manufacturing costs" for the period, then Answers: Correct ending work in process is less than the amount of beginning work in process inventory
The inventory accounts that show the cost of completed goods on hand and the costs applicable to production that is only partially completed are, respectively Answers: Correct Finished Goods Inventory and Work in Process Inventory. The major reporting standard for presenting managerial accounting information is Answers:
Which one of the following does not appear on the balance sheet of a manufacturing company? Answers: Cost of goods manufactured Which of the following is not a management function? Answers: Management accountants would not Answers: Correct prepare reports primarily for external users. Which one of the following is an example of a period cost? Answers: Correct A manager's salary for work that is done in the corporate head office Planning is a function that involves Answers: Correct setting goals and objectives for an entity. What is work in process inventory generally described as? Answers: Correct Costs applicable to units that have been started in production but are only partially completed Cost of goods manufactured is calculated as follows: Answers: Correct Beginning WIP + direct materials used + direct labor + manufacturing overhead – ending WIP. A manufacturing process requires small amounts of glue. The glue used in the production process is classified as a(n) Answers: Correct indirect material. Which of the following is not used in assigning manufacturing costs to work in process inventory? Answers: Correct Actual manufacturing overhead Which one of the following best describes a job cost sheet? Answers: Correct It is a form used to record the costs chargeable to a specific job and to determine the total and unit costs of the completed job. When a job is completed and all costs have been accumulated on a job cost sheet, the journal entry that should be made is. Finished Goods Inventory The predetermined overhead rate is based on the relationship between Answers: Correct estimated annual costs and expected annual activity. Which of the following is one of the components of cost accounting? Answers: Correct It involves measuring product costs. A major purpose of cost accounting is to Answers: Correct measure, record, and report product costs. Cost of raw materials is debited to Raw Materials Inventory when the Answers: Correct materials are received. Which of the following is not viewed as part of accumulating manufacturing costs in a job order cost system? Answers: Correct Cost of goods sold is recognized Process costing is used when Answers: Correct the production process is continuous. Overapplied manufacturing overhead exists when overhead assigned to work in process is Answers: Correct more than overhead incurred and there is a credit balance in Manufacturing Overhead at the end of a period. A production cost report Answers: will show quantity and cost data for a production department. A process cost system would be used for all of the following products except Answers: In process cost accounting, manufacturing costs are summarized on a Answers: Correct production cost report. Which of these best reflects a distinguishing factor between a job order cost system and a process cost system? Answers: Correct The number of work in process accounts. In the Camria Company, materials are entered at the beginning of the process. If there is no beginning work in process, but there is an ending work in process inventory, the number of equivalent units as to materials costs will be Answers: Correct the same as the units started. In a process cost system, product costs are summarized: Answers: Correct on production cost reports. Equivalent units are calculated by Answers: Correct multiplying the percentage of work done by the physical units. A primary driver of overhead costs in continuous manufacturing operations is: Answers: In a process cost system, unit costs are determined using a Answers: Correct denominator of units produced during the period. In a production cost report, which one of the following sections is not shown under Costs? Answers: A flexible budget Answers: Correct projects budget data for various levels of activity. Controllable margin is defined as Answers: Correct contribution margin less controllable fixed costs. In developing a flexible budget within a relevant range of activity, Answers: Correct it is necessary to relate variable cost data to the activity index chosen. The purpose of the departmental overhead cost report is to Answers: Which of the following would not be considered an aspect of budgetary control? Answers: Correct It provides a guarantee for favorable results. A cost center Answers: Correct only incurs costs and does not directly generate revenues. In the formula for ROI, idle plant assets are Answers: Correct excluded in the calculation of operating assets. Performance reports for cost centers compare actual Answers: Correct controllable costs with flexible budget data. A responsibility report should Answers: Correct show only those costs that a manager can control. Opportunity cost must be considered in decisions involving Answers: Correct resources that have alternative uses. The opportunity cost of an alternate course of action that is relevant to a make-or-buy decision is Answers: Correct added to the "Make" costs. The cash disposal value of old equipment is considered to be a (an) Answers:
If a plant is operating at full capacity and receives a one-time opportunity to accept an order at a special price below its usual price, then Answers: Correct the order will likely be rejected. Which of the following is true if a company can accept a special order without affecting its regular sales and is within plant capacity? Answers: Correct Net income will increase if the special sales price per unit exceeds the unit variable costs. If an unprofitable segment is eliminated Answers:
Correct variable expenses of the eliminated segment will be eliminated. The source of data to serve as inputs in incremental analysis is generated by Answers: Which of the following is a true statement about cost behaviors in incremental analysis? Incremental analysis would not be appropriate for Answers: Correct analysis of manufacturing variances. In incremental analysis, Answers: Correct all costs are relevant if they change between alternatives. Incremental analysis is synonymous with Answers: Correct differential analysis. If a company must expand capacity to accept a special order, it is likely that there will be Answers: Correct an increase in fixed costs. The starting point in preparing a master budget is the preparation of the Answers: A critical factor in budgeting for a service firm is to Answers: Correct coordinate professional staff needs with anticipated services. Which one of the following is not a benefit of budgeting? Answers: It provides assurance that the company will achieve its objectives. For a merchandiser, the starting point in the development of the master budget is the Answers: Orange Co. is a manufacturer and Pineapple Company is a merchandiser. What is the difference in the budgets the two entitites will prepare? Answers: Correct Orange Co. will prepare a production budget, and Pineapple Company will prepare a merchandise purchases budget. What is the proper preparation sequencing of the following budgets? 1. Budgeted
Balance Sheet Answers: Of the following items, which one is not obtained from an individual operating budget? Answers: Correct Accounts receivable A purchases budget is used instead of a production budget by Answers: Correct merchandising companies. Which of the following is not an operating budget? Answers: The important end-product of the operating budgets is the Answers: Correct budgeted income statement. Hyde Corp.'s cash budget showed total available cash less cash disbursements what does this amount equal? Answers:
Correct The excess of available cash over cash disbursements Which of the following does not appear as a separate section on the cash budget? Answers: Correct Capital expenditures Which statement is true about relevant costs in incremental analysis?Which statement is true about relevant costs in incremental analysis? All costs are relevant if they change between alternatives.
What are the 3 most common classifications of cost behavior?Answer: The three basic cost behavior patterns are known as variable, fixed, and mixed.
What are the four types of cost behavior?Types of cost behavior. Total variable costs = Cost per unit x Total number of units.. Total fixed cost = Cost of production - Variable costs x Units produced.. Total cost = Fixed cost per period + Variable rate per unit of activity x Number of units of an activity.. How would you describe cost behavior?What is Cost Behavior? Cost behavior is the manner in which expenses are impacted by changes in business activity. A business manager should be aware of cost behaviors when constructing the annual budget, to anticipate whether any costs will spike or decline.
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