# Managerial Accounting Chapter 6 Quiz Notes – Flashcards Brenda Gannon
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Cost behavior
how costs change as volume changes
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Common Cost Behaviors (3)
Fixed cost, Variable Cost, Mixed Cost
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Ways to describe cost behavior
cost graph + cost equation
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Fixed Cost (definition, equation, examples)
is constant and/or doesnt change in relation to volume y = f rent, cable bill, straight line depreciation
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Variable Cost (definition, equation, examples)
Changes in direct proportion to volume y = vx direct material, direct labor, units of production depreciation
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Mixed Cost (definition, equation, examples)
contains both variable and fixed cost components y = f + vx sales commissions, utilities
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Y Axis X Axis
Cost Volume
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Fixed Costs (Total vs Per Unit)
remain constant (do not change in volume) Vary Inversely with changes in volume
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Variable Costs (Total vs Per Unit)
change in direct proportion to changes in volume remain constant (do not change in volume)
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Account Analysis
use every cost account to determine whether fixed, variable, mixed
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Scatter Plots
(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
(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
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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Sales Revenue (COGS) Gross Profit (Operating Expenses) Net Income
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Contribution Margin Income Statement
Sales (Variable Costs) Contribution Margin (Fixed Costs) Net Income
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Contribution Margin Income Statement organized by...
cost behavior
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Traditional Income Statement organized by...
cost function
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Contribution Margin
sales revenue - variable costs
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Contribution Margin shows..
managers how much profit has been made on sales before considering fixed costs
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Above the contribution margin line
variable costs
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Below the contribution margin line
fixed costs
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Operating income will
always be the same regardless of the income statement format used
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Fixed Cost Graph
--------------------- (HORIZONTAL)
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Variable Cost Graph
45 DEGREE ANGLE
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Mixed Cost Graph
combo of fixed + variable
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## Unlock all answers in this set

question
Cost behavior
how costs change as volume changes
question
Common Cost Behaviors (3)
Fixed cost, Variable Cost, Mixed Cost
question
Ways to describe cost behavior
cost graph + cost equation
question
Fixed Cost (definition, equation, examples)
is constant and/or doesnt change in relation to volume y = f rent, cable bill, straight line depreciation
question
Variable Cost (definition, equation, examples)
Changes in direct proportion to volume y = vx direct material, direct labor, units of production depreciation
question
Mixed Cost (definition, equation, examples)
contains both variable and fixed cost components y = f + vx sales commissions, utilities
question
Y Axis X Axis
Cost Volume
question
Fixed Costs (Total vs Per Unit)
remain constant (do not change in volume) Vary Inversely with changes in volume
question
Variable Costs (Total vs Per Unit)
change in direct proportion to changes in volume remain constant (do not change in volume)
question
Account Analysis
use every cost account to determine whether fixed, variable, mixed
question
Scatter Plots
(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
(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
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
Sales Revenue (COGS) Gross Profit (Operating Expenses) Net Income
question
Contribution Margin Income Statement
Sales (Variable Costs) Contribution Margin (Fixed Costs) Net Income
question
Contribution Margin Income Statement organized by...
cost behavior
question
Traditional Income Statement organized by...
cost function
question
Contribution Margin
sales revenue - variable costs
question
Contribution Margin shows..
managers how much profit has been made on sales before considering fixed costs
question
Above the contribution margin line
variable costs
question
Below the contribution margin line
fixed costs
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Operating income will