Managerial Accounting Chapter 6 Quiz Notes – Flashcards

question
Cost behavior
answer
how costs change as volume changes
question
Common Cost Behaviors (3)
answer
Fixed cost, Variable Cost, Mixed Cost
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Ways to describe cost behavior
answer
cost graph + cost equation
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Fixed Cost (definition, equation, examples)
answer
is constant and/or doesnt change in relation to volume y = f rent, cable bill, straight line depreciation
question
Variable Cost (definition, equation, examples)
answer
Changes in direct proportion to volume y = vx direct material, direct labor, units of production depreciation
question
Mixed Cost (definition, equation, examples)
answer
contains both variable and fixed cost components y = f + vx sales commissions, utilities
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Y Axis X Axis
answer
Cost Volume
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Fixed Costs (Total vs Per Unit)
answer
remain constant (do not change in volume) Vary Inversely with changes in volume
question
Variable Costs (Total vs Per Unit)
answer
change in direct proportion to changes in volume remain constant (do not change in volume)
question
Account Analysis
answer
use every cost account to determine whether fixed, variable, mixed
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Scatter Plots
answer
(particular for mixed costs) is the graph of historical cost data on the y axis and volume data on the x axis, helping managers to visualize the relationship between cost and volume of activity
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High-low method
answer
(particular for mixed costs) is a method to estimate the variable and fixed cost components of a mixed cost it fits a mixed cost line through the highest and lowest VOLUME data points
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High-low method Steps
answer
1. identify highest and lowest VOLUME 2. Find the slope(v) (cost/volume) of those points^ 3. Find f by plugging in v, y, x in equation 4. write the equation
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Traditional Income Statement
answer
Sales Revenue (COGS) Gross Profit (Operating Expenses) Net Income
question
Contribution Margin Income Statement
answer
Sales (Variable Costs) Contribution Margin (Fixed Costs) Net Income
question
Contribution Margin Income Statement organized by...
answer
cost behavior
question
Traditional Income Statement organized by...
answer
cost function
question
Contribution Margin
answer
sales revenue - variable costs
question
Contribution Margin shows..
answer
managers how much profit has been made on sales before considering fixed costs
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Above the contribution margin line
answer
variable costs
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Below the contribution margin line
answer
fixed costs
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Operating income will
answer
always be the same regardless of the income statement format used
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Fixed Cost Graph
answer
--------------------- (HORIZONTAL)
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Variable Cost Graph
answer
45 DEGREE ANGLE
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Mixed Cost Graph
answer
combo of fixed + variable
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question
Cost behavior
answer
how costs change as volume changes
question
Common Cost Behaviors (3)
answer
Fixed cost, Variable Cost, Mixed Cost
question
Ways to describe cost behavior
answer
cost graph + cost equation
question
Fixed Cost (definition, equation, examples)
answer
is constant and/or doesnt change in relation to volume y = f rent, cable bill, straight line depreciation
question
Variable Cost (definition, equation, examples)
answer
Changes in direct proportion to volume y = vx direct material, direct labor, units of production depreciation
question
Mixed Cost (definition, equation, examples)
answer
contains both variable and fixed cost components y = f + vx sales commissions, utilities
question
Y Axis X Axis
answer
Cost Volume
question
Fixed Costs (Total vs Per Unit)
answer
remain constant (do not change in volume) Vary Inversely with changes in volume
question
Variable Costs (Total vs Per Unit)
answer
change in direct proportion to changes in volume remain constant (do not change in volume)
question
Account Analysis
answer
use every cost account to determine whether fixed, variable, mixed
question
Scatter Plots
answer
(particular for mixed costs) is the graph of historical cost data on the y axis and volume data on the x axis, helping managers to visualize the relationship between cost and volume of activity
question
High-low method
answer
(particular for mixed costs) is a method to estimate the variable and fixed cost components of a mixed cost it fits a mixed cost line through the highest and lowest VOLUME data points
question
High-low method Steps
answer
1. identify highest and lowest VOLUME 2. Find the slope(v) (cost/volume) of those points^ 3. Find f by plugging in v, y, x in equation 4. write the equation
question
Traditional Income Statement
answer
Sales Revenue (COGS) Gross Profit (Operating Expenses) Net Income
question
Contribution Margin Income Statement
answer
Sales (Variable Costs) Contribution Margin (Fixed Costs) Net Income
question
Contribution Margin Income Statement organized by...
answer
cost behavior
question
Traditional Income Statement organized by...
answer
cost function
question
Contribution Margin
answer
sales revenue - variable costs
question
Contribution Margin shows..
answer
managers how much profit has been made on sales before considering fixed costs
question
Above the contribution margin line
answer
variable costs
question
Below the contribution margin line
answer
fixed costs
question
Operating income will
answer
always be the same regardless of the income statement format used
question
Fixed Cost Graph
answer
--------------------- (HORIZONTAL)
question
Variable Cost Graph
answer
45 DEGREE ANGLE
question
Mixed Cost Graph
answer
combo of fixed + variable