Exam 2 (Quiz 5) - Chapter 20 Flashcards
Answer:
CVP analysis stands for ___(a)___, ___(b)___, ___(c)___ analysis
a. Cost
2. Volume
3. Profit
List:
Types of Cost
- Variable Cost
- Fixed Cost
- Mixed Cost
Answer:
___(a)___ variable cost will increase when ___(a)___ and decrease when ___(c)___
a. Total
b. volume/activity increases
c. volume/activity decreases
Answer:
If there is no ___(a)___, there is no ___(b)___ variable cost because it changes ___(c)___
a. volume
b. total
c. proportionate to volume
Answer:
Total variable cost ___(a)___, while variable cost per unit ___(b)___
a. changes proportionate to volume
b. stays the same
Answer:
Total fixed cost ___(a)___, while fixed cost per unit ___(b)___
a. is not going to change within a relevant range
b. change proportionate to volume
Answer:
___(a)___ fixed cost will increase when ___(a)___ and decrease when ___(c)___
a. Per unit
b. volume decreases
c. volume increases
Answer:
Mixed cost includes ___(a)___ and ___(b)___. An example is ___(c)___
a. Variable costs
b. Fixed Costs
c. CEO compensation - base salary is fixed, but bonuses are variable
List:
Examples of Volume
- Number of units
- Number of calls customer service answered
It can be anything
Answer:
Fixed costs are ___(a)___ in the future, however if they are high ___(b)___
a. predictable
b. you still have to pay them even if you don’t sell product
Answer:
When you ___(a)___ the number of events, you ___(b)___ fixed cost per unit, which results in ___(c)___ if you can ___(d)___
a. increase
b. decrease
c. savings
d. engage in more events
Define:
High-Low Method of Cost Function
You look at all points of data and use the highest and lowest points to calculate cost function
Answer:
The ___(a)___ is the cost coefficient, which is ___(b)___ divided by ___(c)___
a. variable cost per unit
b. difference in cost
c. difference in volume
Answer:
The cost function shows the relationship between ___(a)___ and ___(b)___
a. cost
b. volume
Define:
Break-Even Analysis
Means that profit equals 0
Answer:
What does break-even analysis ask?
If I want to break-ever (profit = 0), how many units do I need to sell?
Answer:
Break-even is not the ___(a)___, it is a very important ___(b)___
a. goal
b. threshold to meet or beat
Answer:
You can apply break-even analysis to any ___(a)___ by replacing ___(b)___ with ___(c)___
a. CVP analysis
b. zero
b. the profit you want to get
List:
Methods for Break-Even Analysis
- Income Statement Approach
2. Contribution Margin Approach
Answer:
The break even point is the intersection of ___(a)___ and ___(b)___. At this point, ___(c)___ equals ___(d)___
a. cost
b. sales revenue
c. total cost
d. total sales revenue
Answer:
The typical CVP analysis will show you ___(a)___ area and ___(b)___
a. income
b. loss
Define:
Sensitivity Analysis
Looks at what happens to CVP analysis if one of your variables changes
Answer:
The higher the ___(a)___ and the lower the ___(b)___, the more difficult it is for you to ___(c)___
a. cost
b. profit
c. break even
