Accounting 2 bankset 2 – Flashcards
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The ability of a business to earn a reasonable amount of income is referred to as the factor of
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profitability
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An analysis in which all the components of an income statement are expressed as a percentage of net sales is called
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vertical analysis
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Which of the following is not an analysis used in assessing solvency?
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asset turnover
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If sales are $300,000, variable costs are 75% of sales, and operating income is $40,000, what is the operating leverage?
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1.875
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The difference between the current sales revenue and the sales at the break-even point is called the
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margin of safety
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Cost-volume-profit analysis cannot be used if which of the following occurs?
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costs cannot be properly classified into fixed and variable costs
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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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Which of the following activity bases would be the most appropriate for food costs of a hospital?
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Number of patients who stay in the hospital
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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 NOT an example of a cost that varies in total as the number of units produced changes?
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straight-line depreciation on factory equipment
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Which of the following describes the behavior of the variable cost per unit?
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Remains constant with changes in the activity level
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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 cost
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If sales are $820,000, variable costs are 62% of sales, and operating income is $260,000, what is the contribution margin ratio?
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38%
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If fixed costs are $850,000 and variable costs are 75% of sales, what is the break-even point (dollars)?
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$3,400,000
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If fixed costs are $200,000, unit contribution margin is $20, what number of units must be sold to have a zero profit
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10,000
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If fixed costs are $561,000 and the unit contribution margin is $8.00 what is the break-even point in units if variable costs are decreased by $0.50 a unit?
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66,000
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Which of the following conditions would cause the break-even point to increase?
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Total fixed costs increase
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Cialini Company has budgeted salary increases to factory supervisors totaling 10%. If selling prices and all other cost relationships are held constant, next year's break-even point will
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increase by 10%
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The relative distribution of sales among the various products sold by a business is termed the
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sales mix
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What term is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost, direct labor cost, and variable factory overhead cost?
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Variable costing
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Another name for variable costing is
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direct costing
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Which of the following would be included in the cost of a product manufactured according to variable costing?
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direct materials
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The amount of income under absorption costing will equal the amount of income under variable costing when units manufactured
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equal units sold
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The amount of income under absorption costing will be more than the amount of income under variable costing when units manufactured
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exceed units sold
