Managerial Accounting Exam 2 – Reed UC SS16 – Flashcards
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foundation upon with managerial accounting is built
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Cost Behavior
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Describes whether a costs changes when the level of output changes
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Cost Behavior
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A cost that does not change in total as output changes
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Fixed Costs
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increases in the total with an increase in output and decreases in total with a decrease in output
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Variable Costs
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A casual factor that measures the output of the activity that leads (or causes) cost change
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Cost Driver
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Weather is a significant ________ _________ in the air line industry.
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Cost Driver
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______ and ______ costs have meaning only when related to some output measure.
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Fixed, Variable
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the range of output over which the assumed cost relationship is valid for the normal operations of the firm
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Relevant Range
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are fixed costs that can be changed or avoided easily at management discretion.
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Discretionary fixed costs
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are fixed costs that cannot be easily changed.
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Committed fixed costs
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Advertising is an example of a ___________ fixed cost, because it depends on a management decision.
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Discretionary
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Lease cost is a _________ fixed cost because it involves a long-term contract.
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Committed
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are costs that have both a fixed and a variable component.
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Mixed Costs
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Overhead for a company may consist of a fixed supervisor salary plus the cost of supplies that vary with the quantity of output produced. This is an example of _________ _________.
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Mixed Costs
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Displays a constant level of cost for a range of output and then jumps to a higher level (or step) of cost at some point, where it remains for a similar range of output.
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Step Costs (semi-fixed)
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The _________ is method of separating mixed costs into fixed and variable components by using just the high and low data points.
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high-low method
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The ____________ method is a way to see the cost relationship by plotting the data points on a graph.
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scattergraph
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is a statistical way to find the best-fitting line through a set of data points. Always produces the same cost formula for sets of data.
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method of least squares (regression)
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estimates how changes in the following three factors affect a company's profit.
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Cost-volume-profit (CVP) analysis
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is the point where total revenue equals total cost (aka the point of zero profit) See also: The level of sales at which contribution margin just covers fixed costs and when operating income is equal to zero.
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Break-Even Point
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is the difference between sales and variable expense. It is the amount of sales revenue left over after all the variable expenses are covered that can be used to contribute to fixed expense and operating income.
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Contribution Margin
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If contribution margin income statement is recast as an equation, it becomes _____ useful for solving CVP problems.
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More
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are those fixed costs that can be traced to each segment and would be avoided if the segment did not exist.
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Direct Fixed Expenses
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are the fixed costs that are not traceable to the segments and would remain even if one of the segments was eliminated.
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Common Fixed Expenses
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is the relative combination of products being sold by a firm.
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Sales mix
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is the units sold or the revenue earned above the break-even volume
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Margin of Safety
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is use of fixed costs to extract higher percentage changes in profits as sales activity changes.
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Operating Leverage
