Flashcards and Answers – Finance Ch.12
Unlock all answers in this set
Unlock answersquestion
Managerial accounting, as compared to financial accounting:
answer
uses frequent and prompt control reports
question
Which of the following activities is not part of the management planning and control cycle:
answer
providing information to investors and creditors.
question
Managerial accounting supports the management process most significantly by:
answer
providing estimates of financial results for various plans.
question
Operating income using the contribution margin format income statement is calculated as:
answer
revenue - variable expenses = contribution margin - fixed expenses.
question
As the level of activity increases:
answer
fixed cost per unit decrease.
question
The contribution margin format income statement is organized by
answer
cost behavior classifications.
question
The relevant range concept refers to:
answer
a firm's range of activity.
question
A management decision that would have a long term influence on the operating leverage of a firm would be:
answer
substituting robots for hourly paid production workers.
question
Simplifying assumptions made when using cost behavior pattern data include
answer
relevant range and linearity.
question
Each of a company's two product lines has a different contribution margin ratio. If the company's total sales remain the same but the sales mix shifts toward selling more of the product with the higher contribution ratio, which of the following is true?
answer
Operating income will increase. incorrect → All of these are true. The average contribution margin ratio will increase. The break-even point will decrease.
question
If fixed costs were increased by $9,000 and the contribution margin ratio remained at 30 percent, then sales must increase by _________ in order to cover the additional fixed expenses.
answer
$30,000
question
When the high-low method of estimating a cost behavior pattern is used:
answer
cost and volume data must be reviewed for outliers
question
Which of the following statements does not describe a characteristic of management accounting?
answer
Management accounting must conform to GAAP.
question
The break-even point in terms of total revenues per month is: Selling Price per unit$100 Varieble expenses per unit $40 Fixed expense per month $60,000
answer
$100,000.
question
The contribution margin ratio is:^^^^^
answer
60%
question
A 10% change in a firm's revenues is likely to result in a change of more than 10% in the firm's operating income because:
answer
not all of the firm's costs will change in proportion to the revenue change.
question
The formula for expressing the total of a fixed, variable, or mixed cost at any level of activity is:
answer
total cost = fixed cost + (variable rate * volume of activity).
question
Which of the following terms do not appear on the contribution margin format income statement:
answer
gross profit.
question
An example of a cost likely to have a fixed behavior pattern is:
answer
advertising cost.
question
The scattergram allows cost-volume relationships to be visually scanned for outlier observations that should be:
answer
ignored in the calculation of the cost formula of a mixed cost.
question
An example of a cost that is likely to have a variable behavior pattern is:
answer
production labor wages.
question
An example of a cost likely to have a mixed behavior pattern is:
answer
electricity cost for the manufacturing plant.
question
As the level of activity decreases:
answer
fixed cost remains constant in total.
question
Cost behavior refers to:
answer
costs that are variable or fixed.
question
The break-even point volume of units is:
answer
1000
