Quiz Week 8 – Flashcards
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Management accounting is:
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an activity that gets involved with virtually all of the other functional areas of the organization
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The contribution margin format income statement:
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uses a behavior pattern classification for costs rather than a functional cost classification approach
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Operating income using the contribution margin format income statement is calculated as
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revenue - variable expenses = contribution margin - fixed expenses
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The term "relevant range" refers to:
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the range of activity where cost relationships are valid
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ABU Co. has several products, each with a different contribution margin ratio. If the same number of units were sold in July as in June, but the sales mix changed:
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total contribution margin in July would be different from that in June.
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Using the high-low method, the monthly fixed component of maintenance cost is:
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$1,200
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Operating income at a volume of 4,000 units per month is:
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$180,000
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The contribution margin ratio always decreases when the:
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variable cost increase and the selling price remains constant
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Which of the following statements does not describe a characteristic of management accounting?
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Management accounting must conform to GAAP
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The contribution margin format income statement is organized by:
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cost behavior classifications
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As the total volume of activity changes
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the total of variable costs changes
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To which function of management is CVP analysis most applicable?
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Planning
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Expressing fixed costs on a per unit basis of activity is misleading because
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fixed cost per unit decrease as activity increases
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The relevant range concept refers to:
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a firm's range of activity.
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The cost of a single unit of production in excess of the breakeven point in units is:
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its variable cost only
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What percentage of the contribution margin is profit on units sold in excess of the breakeven point?
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It's 100%.
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Each of a company's several product lines has a different contribution margin ratio. Total sales in 2011 were 20% higher than total sales in 2010. Total contribution margin for 2011 will be:
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more than 20% higher than it was in 2010, if the sales mix changes and proportionately more high contribution margin ratio products are sold in 2011 than in 2010.
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An example of a cost likely to have a mixed behavior pattern is:
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electricity cost for the manufacturing plant.
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When a cost formula is used to describe a mixed (semi-variable) cost behavior pattern, total costs are expected to increase and per unit costs are expected to:
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remain constant as the level of activity increases.
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Knowledge about the behavior pattern of a cost is important to understanding the effect on net income of a change in sales volume because as sales volume changes:
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the effect on net income will depend on the behavior pattern of various costs.
