Acc II (3) – Flashcards
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If fixed costs are $200,000 and the unit contribution margin is $20, what amount of units must be sold in order to have a zero profit?
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10,000
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Cost behavior refers to the manner in which
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a cost changes as the related activity changes
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The three most common cost behavior classifications are
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fixed costs, variable costs, mixed costs
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Costs that remain constant in total dollar amount as the level of activity changes are called
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fixed costs
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Which of the following costs is an example of a cost that remains the same in total as the number of units produced changes?
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salary of a factory supervisor
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Which of the following describes the behavior of the fixed cost per unit?
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decreases with increasing total production
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Which of the following activity bases would be the most appropriate for gasoline costs of a delivery service such as United Postal Service?
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number of miles driven
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Most operating decisions of management focus on a narrow range of activity called the
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relevant range of production
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Costs that vary in total in direct proportion to changes in an activity level are called
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variable costs
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Which of the following is an example of a cost that varies in total as the number of units produced changes?
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direct materials costs
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Which of the following is NOT an example of a cost that varies in total as the number of units produced changes?
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insurance premiums on factory building
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Which of the following costs is a mixed cost?
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rental cost of $5,000 per month plus $.30 per machine hour of use
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Which of the following statements is true regarding fixed and variable costs?
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fixed costs are constant in total; variable costs are constant per unit
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Knowing how costs behave is useful to management for all of the following reasons except for
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predicting customer demand
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the systematic examination of the relationships among selling prices, volume of sales and production, costs, and profits is termed
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cost-volume-profit analysis
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Contribution margin is
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the excess of sales revenue over variable costs
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What ratio indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit?
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contribution margin ratio
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A formal written statement of management's plans for the future expressed in financial terms is a
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budget
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the budgetary unit of an organization which is led by a manager who has both the authority over and responsibility for the unit's performance is know as a
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responsibility center
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When management seeks to achieve personal departmental objectives that may work to the detriment of the entire company, the manager is experiencing
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goal conflict
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Which of the following budgets allow for adjustments in activity levels?
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flexible budget
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The process of developing budget estimates by requiring all levels of management to estimate sales, production, and other operating data as though operations were being initiated for the first time is referred to as
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zero based budgeting
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A variant of fiscal-year budgeting whereby a twelve-month projection into the future is maintained at all times is termed
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continuous budgeting
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The budget that needs to be completed first when preparing the master budget is the
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sales budget
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Which of the following budgets should be coordinated with the preparation of the direct labor cost budget?
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production budget
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The budget that summarizes future plans for the acquisition of fixed assets is the
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capital expenditures budget
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Estimated cash payments are planned reductions in cash from all of the following except (Hint: Remember, this is about actual cash payments, not cash receipts.)
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notes payable and accounts receivable collections
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The operating budgets of a company include
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the production budget
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When preparing the cash budget, all of the following should be considered except:
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depreciation expense
