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Accounting > Exam 2-202 > Flashcards

Exam 2-202 Flashcards

1
Q

Total revenue line

A

Starts at orgin slopes up

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2
Q

Fixed cost line

A

Horizontal line

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3
Q

Total cost line

A

Starts at fixed cost line and slopes up

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4
Q

Break even point

A

Total revenue crosses total cost

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5
Q

Variable cost

A

Cost whose total dollar amount varies in direct proportion to changes in the activity level. Constant on per unit basis, slope of the line is variable cost

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6
Q

Fixed cost

A

Remain constant in total dollars as volume changed within the relevant range of activity. Increases as volume decreases

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7
Q

Step cost

A

Only obtainable in chunks

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8
Q

Scatter plot method

A

Total maintance cost-fixed cost=variable cost. /units=variable cost per unit

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9
Q

High low method

A

Based on level of activity. Change in cost/change volume

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10
Q

Absorpition costing

A

Cogs=DM,DL,all MOH

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11
Q

Variable costing

A

Cogs=DM,DL,variable MOh

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12
Q

Advantages absortion costing

A

GAAP and meets matching principal

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13
Q

Disadvantages absorption

A

Not for CVP, fixed MOH as variable

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14
Q

Advantages variable costing

A

Useful for manages not responsible for fixed costs. CVP analysis

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15
Q

Disadvantages variable costing

A

Different for GAAP

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16
Q

Sales equals

A

VC+FC+profit

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17
Q

Contribution margin

A

Sales-VC

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18
Q

Contribution Margin Ratio

A

(Sales-VC)/sales

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19
Q

Assumptions underlying CVP analysis

A

Selling price per unit is constant, cost are linear, sales mix is constant, no change in inventories

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20
Q

Break even in sales

A

Fixed expenses/CMR

21
Q

Break even in units

A

Fixed expenses/CM

22
Q

Sales to profit

A

(Fixed + profit)/CMR

23
Q

of units to profit

A

(Fixed +profit)/CM

24
Q

Margin of safety

A

Total sales-break even sales

25
Q

Margin of safety as % of sales

A

Margin of safety/sales

26
Q

Operating leverage

A

Measure of hoe a percent change in sales will affect profits

27
Q

Operating leverage equation

A

(S-V)/(CM-FC)

CM/NOI

28
Q

Relevant cost are

A

Incremental, differential and marginal

29
Q

Differential approacht

A

Only relevant cost are considered

30
Q

Total cost approach

A

All revenue and cost are displayed in income statement then NOI is compared

31
Q

Special order

A

Accept a special order if incremental revenue exceeds the incremental expense of producing it

32
Q

Target costing

A

Revenue-profit=target total cost

33
Q

Cost plus pricing

A

Total cost+profit=cost plus price

34
Q

Discontinue a product

A

Drop if advoidable FC exceeds CM

35
Q

Resource constraints

A

Given bottle neck, emphasize the products with the greatest CM/unit of constrained resources

36
Q

Make or buy

A

Choose alternatice that has the greatest net incremental revenues over incremnetal cost

37
Q

Joint products

A

Continue process after split off point if the revenue exceeds cost of more processing

38
Q

Budget

A

A detailed plan for acquiringg and using financial and other resources over a specific period

39
Q

Budgeting is used for

A

Planning and control

40
Q

Issues to consider in budgeting

A

Strategic planning, budget period, type of budgeting, input process

41
Q

Steps for creating a master budget

A
  1. Sales budget 2. Production 3. DM budget 4. DL budget 5. MOH budget 6. Operating expenses budget 7. Budgeted income statement 8. Capital expenditured budget 9. Cash budgets 10. Budgeted balance sheet
42
Q

The first 7 budgets are

A

Operating budgets used to build income statements

43
Q

The last three budgets are

A

Financial budgets

44
Q

Sales budgets

A

Expected sales x selling price per unit

45
Q

Production budgets

A

Expected sales+ending inventory-beginning inventory

46
Q

DM budget

A

DM needed+desired FG inventory-beginning inventory

47
Q

Income statement budget

A

Sales-COGS=gross profit-SGA=NOI-nonoperating income=net income

48
Q

Capital expenditures budget

A

Planned purchases of long-lived assets

49
Q

Cash collections budget

A

May be useful in analyzing the flow of sales/accounts recievable/receipts

Accounting (30 decks)

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