Management Accounting Ch06
Quizzes and Glossary
Quizzes and Glossary
Set of flashcards Details
| Flashcards | 22 |
|---|---|
| Language | Deutsch |
| Category | Finance |
| Level | University |
| Created / Updated | 01.06.2021 / 03.02.2023 |
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The CVP income statement classifies costs as variable or fixed and computes a contribution margin.
The margin of safety indicates how much sales must increase before a company will be operating at a profit.
Sales mix is the relative percentage in which each product is sold when a company sells more than one product.
When multiple products exist, the break-even point in dollars is computed by dividing fixed costs by the weighted-average contribution margin.
When a company has limited resources, management must decide which product to make and sell in order to maximize contribution margin ratio.
Contribution margin per unit of limited resource is obtained by dividing the contribution margin per unit of each product by the number of units of the limited resource required for each product.
Operating leverage refers to the extent to which a company’s net income reacts to a given change in production.
Companies that have higher fixed costs relative to variable costs have higher operating leverage.
Under variable costing, all variable costs are considered product costs.
Fixed manufacturing costs are a product cost under absorption costing but are a period cost under variable costing.
For a company selling multiple products, the break-even point in dollars is computed by dividing fixed costs by the
In order to maximize net income a company should produce and sell the product with the highest.
Operating leverage refers to the extent to which a company’s net income reacts to a given change in
Under variable costing, all of the following are considered product costs except
All of the following are potential advantages of variable costing except that
Absorption costing
A costing approach in which all manufacturing costs are charged to the product.
Cost structure
The relative proportion of fixed versus variable costs that a company incurs.
Degree of operating leverage
A measure of the extent to which a company's net income reacts to a change in sales. It is calculated by dividing contribution margin by net income.
Operating leverage
The extent to which a company's net income reacts to a change in sales. Operating leverage is determined by a company's relative use of fixed versus variable costs.
Sales mix
The relative percentage in which a company sells its multiple products.
Theory of constraints
A specific approach used to identify and manage constraints in order to achieve the company's goals.
Variable costing
A costing approach in which only variable manufacturing costs are product costs, and fixed manufacturing costs are period costs (expenses).
