Management Accounting Ch05
Quizzes and Glossary
Quizzes and Glossary
Set of flashcards Details
| Flashcards | 34 |
|---|---|
| Language | English |
| Category | Finance |
| Level | University |
| Created / Updated | 31.05.2021 / 01.02.2023 |
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Cost behavior analysis
The study of how specific costs respond to changes in the level of business activity.
Cost-volume-profit (CVP) analysis
The study of the effects of changes in costs and volume on a company's profits.
Cost-volume-profit (CVP) graph
A graph showing the relationship between costs, volume, and profits.
Cost-volume-profit (CVP) income statement
A statement for internal use that classifies costs as fixed or variable and reports contribution margin in the body of the statement.
Fixed costs
Costs that remain the same in total regardless of changes in the activity level.
High-low method
A mathematical method that uses the total costs incurred at the high and low levels of activity to classify mixed costs into fixed and variable components.
Margin of safety
The difference between actual or expected sales and sales at the break-even point.
Mixed costs
Costs that contain both a variable- and a fixed-cost element and change in total but not proportionately with changes in the activity level.
Relevant range
The range of the activity index over which the company expects to operate during the year.
Target net income
The income objective set by management.
Unit contribution margin
The amount of revenue remaining per unit after deducting variable costs; calculated as unit selling price minus unit variable costs.
Variable costs
Costs that vary in total directly and proportionately with changes in the activity level.
Variable costs are costs that:
Tanaya Company's contribution margin ratio is 30%. If Tanaya's sales revenue is Rp10'000 greater than its break-even sales in rupiah, its net income:
The mathematical equation for computing required sales to obtain target net income can be expressed as Requires Sales =
The range over which a company is expected to operate is called the relevant range of the activity index.
Chapter 5
A mixed cost contains both selling and administrative cost elements.
Chapter 5
Variable costs are costs that remain the same per unit at every level of activity.
Chapter 5
If a salesperson incurs $2,000 of expenses in servicing two customers and $4,000 of expenses in servicing four customers, the fixed costs are $1,000.
Chapter 5
If revenue = $80 and variable cost = 40% of revenue, then contribution margin = $48.
Chapter 5
The contribution margin is the amount of revenue remaining after deducting fixed costs.
Chapter 5
Sales mix is the percentage that each product represents of total sales.
Chapter 5
If the unit contribution margin is $300 and fixed costs are $240,000 then the break-even point in units would be 800 units.
Chapter 5
In a CVP income statement, contribution margin is reported in the body of the statement.
Chapter 5
Margin of safety is the difference between actual sales and contribution margin.
Chapter 5
Which of the following is a false statement regarding assumptions of CVP analysis?
Chapter 5
Mixed costs may be separated into fixed costs and variable costs by using
Chapter 5
If the unit selling price is $500, the unit variable cost is $300, and the total monthly fixed costs are $300,000, then the contribution margin ratio is
Chapter 5
If activity level increases 25% and a specific cost increases from $40,000 to $50,000, this cost would be classified as a
Chapter 5
If total fixed costs are $900,000 and variable costs as a percentage of unit selling price are 40%, then the break-even point in dollars is
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