Planning Techniques Forecasting and Projection

Question 1

What approach is used for internal decision making?

Answer 1

Contribution approach

Question 2

Equation for contribution approach

Answer 2

Revenue-Variable costs=CM-FC=Net income

Question 3

Calculation for CM

Answer 3

Sales price - Variable cost

Question 4

Calculation for contribution margin ratio

Answer 4

Contibution margin / revenue

Question 5

What approach is under US GAAP?

Answer 5

Absorption Approach

Question 6

Equation for absorption approach

Answer 6

Revenue - COGS = Gross margin - Operating expenses = Net income

Question 7

What type of cost is fixed factory overhead in the absorption approach?

Answer 7

Product cost

Question 8

What type of cost is fixed factory overhead in the contribution approach?

Answer 8

Period cost

Question 9

Calculation for Breakeven point in units

Answer 9

Total fixed costs / Contribution margin per unit

Question 10

Calculation for Breakeven point in dollars

Answer 10

Total fixed costs / contribution margin ratio

Question 11

Calculation for sales volume for target profit

Answer 11

(Fixed costs + profit) / Contribution margin ratio

Question 12

Calculation for Margin of safety

Answer 12

Total sales - Breakeven sales

Question 13

Calculation for margin of safety percent

Answer 13

Margin of safety in dollars / total sales

Question 14

Accept Presumed Excess Capacity if?

Answer 14

Sales Price > Variable Costs

Question 15

Accept Presumed Full Capacity if?

Answer 15

Sales Price > Variable Costs + Opportunity Costs

Question 16

What is the contribution margin that would have been produced if the special order were not accepted?

Answer 16

Opportunity cost

Question 17

What does marginal costs include?

Answer 17

All variable costs and any voidable costs

Question 18

What types of costs are relevant?

Answer 18

Incremental and Opportunity

Question 19

What is the simple linear regression model?

Answer 19

y=A+Bx

Question 20

y=

Answer 20

Dependent variable(total costs)

Question 21

A=

Answer 21

Y intercept(total fixed costs)

Question 22

B=

Answer 22

Slope(Change in total costs)

Question 23

x=

Answer 23

Independent variable(Total activity)

Question 24

Calculation for High Low Method

Answer 24

Choose High and Low, Calculate difference between high and low, calculate VC per unit, Find total fixed costs