Chapter 2 Flashcards

1
Q

Fixed cost behaviour

A

When activity increases/decreases:
Total fixed costs stays constant
Fixed cost per unit decreases/increases

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2
Q

Variable costs behaviour

A

Total variable costs increases are units sold increases
Variable costs per unit stay constant

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3
Q

What are mixed costs?

A

Have factors of both fixed and variable components

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4
Q

What is the relevant range?

A

The range of activity

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5
Q

What is the operating leverage?

A

A measure of the extent to which fixed costs are being used in an organization
Contributed margin/net income

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6
Q

What is the format of an income statement under the contribution margin approach?

A

Sales revenue
- Variable costs
Contribution margin
- Fixed costs
Net income

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7
Q

How do you calculate predetermined overhead rate?

A

Budgeted overhead/expected activity

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