Exam 2 Flashcards

1
Q

How to find the contribution margin?

A

Sales revenue - variable expense

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2
Q

Total cost doesn’t change with changes in volume of activity (within the relevant range). the cost per unit will change as volume (number of units) change. the total may be different than expected, however this will not be due to changes in the volume of units made or sold.

A

Fixed cost

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3
Q

cost that will always be fixed?

A

rent, salaries, property tax

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4
Q

changes in total in direct proportion to changes in the level of activity. the total cost increases/decreases as units made increases or decreases

A

variable cost

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5
Q

items that will always be variable cost?

A

DM, DL, Vmoh, sales commision, shipping

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6
Q

it is a ___ cost if it cost you more if you make or sell more?

A

variable

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7
Q

if you sell more it cost you more?

A

variable cost

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8
Q

if you pay a set amount regardless of volume

A

fixed cost

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9
Q

MOH is almost always __ besides __

A

fixed, utilities

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10
Q

cost that are paid monthly/anually. anytime you see “worker or inspector”. remains constant in total

A

fixed cost

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11
Q

__ cost per unit will remain constant

A

variable cost

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12
Q

total __ cost will change with changes in activity but cost per unit doesnt change

A

varibale

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13
Q

As volume increases __ cost will stay the same, and __ cost per unit will stay the same

A

fixed; variable

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14
Q

Break even point in sales units?

A

Total fixed cost/(price per unit - variable cost per unit)

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15
Q

break even point in sales dollars?

A

price per unit X break even sales units

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16
Q

measures the percent of change as a result of a change in percent in the level of output?

A

Degree of operating leverage

17
Q

Helps in measuring the business risk?

A

Degree of operating leverage

18
Q

Calculate the degree of operating leverage?

A

(sales - vc) / (sales - vc - fc)

19
Q

Method that estimates how changes in the following three factors affect a companies profits: cost (both variable and fixed), sales volume, price.

A

cost volume analysis

20
Q

__ costing is also known as direct or marginal costing

A

variable

21
Q

using __ costing a unit of product includes DM, DL, Vmoh., Fmoh

A

absopriton

22
Q

using __ costing a unit of product includes DM, DL, Vmoh

A

variable

23
Q

product costing under __ costing is characteristically higher than under __ costing

A

absorption, variable

24
Q

__ costing is attractive to managers as an alternative to __ costing because to generate data for CVP analysis, considerable time would have to be invested to rework income statements constructed under __ costing

A

variable; absorption; absorption

25
Q

when production is equal to sales, __ change occurs to inventories for either absorption or variable costing methods?

A

no change

26
Q

Net operating income in not effected by changes in production under __ costing?

A

variable

27
Q

cost that are common to several products, processes, activities, departments, territiories, etc. often common cost are subsequently allocated to each of the joint products , joint processes, etc. in order to determine the cost of each.

A

common cost

28
Q

a costing methodology that identifies activities in an organization and assigns the cost of each activity with resources to all products and services according to the actual consumption by each

A

activity based costing

29
Q

What company should use activity based costing

A

companies with significant amount of overhead pertaining to diversity of activities in providing goods or services to customers where demands also vary

30
Q

benefits of budgeting?

A

communicate managers plans
forces employees to think about and plan for the future
serves as a means for allocating resources
helps identify potential bottlenecks
coordinates activities
establishes benchmarks for evaluating performance

31
Q

order of budgets?

A

sales, production, DM, DL, MOH, selling and admin, cost of goods manufactured, cash

32
Q

a 12 month budget that rolls forward one month or quarter as the current month is completed, this approach keeps managers focused at least one year ahead so that they do not become to narrowly focused on short term results

A

continuous budget

33
Q

shows the DL hours required to satisfy the production budget, by knowing in advance how much labor time will be needed through out the budget year, the company can develop plans to adjust the labor force as the situation requires.

A

DL budget

34
Q

the most effective method of budget preparation. a budget that is prepared with full cooperation and participation of managers at all levels. one important limitation of this method is that lower level managers may allow to much budget slack

A

self imposed

35
Q

contribution format income statement using variable costing

A
sales
VCOGS
V sales and admin
Contribution margin
FMOh
F sales and admin
Net income
36
Q

income statement for absorption costing

A
Sales
COGS (DM, DL, VMOH, FMOH)
GM
Selling and admin expense
Net income
37
Q

Direct material budget

A
Production
Materials per unit
production needs
add desired ending inv
total needed
less beginning inv
materials to be purchased
38
Q

Cash budget

A
Beginning cash balance
that month cash sales
credit sales
total cash received
total cash available

less discrepancy:
expenses

finance:
borrow
repay principle
pay interest

ending balance

39
Q

three steps to activity based costing

A

Step 1: find the cost per activity by dividing
Step 2: assign the cost by multiplying (gives you MOH)
Step 3: find the total cost or margin by (+) or (-)
sales
dm
dl
moh