BSNS115 Final Exam Questions And Correct
Answers. Verified Solution.
Variable Costs
Those costs that only occur with production. e.g. raw material, direct labour,
manufacturing overhead
Fixed Costs
Those costs that occur regardless of whether production occurs or not e.g. rent, rates,
salary.
Accounting
The process of identifying, recording, and analysing useful economic information to help
the user make decisions.
Relevant Range
The level of activity over which a particular cost behaviour pattern exists.
Prime Costs
Raw materials and Direct labour.
Contribution Margin
Difference between selling price and variable costs.
Contribution Margin Ratio
The portion of each sales (revenue) that remains after covering the variable costs and is
then available to cover fixed cots or provide for a profit.
Break-even Analysis
Determines the activity level required to cover all costs associated with the business.
i.e. profit = 0
Relevant Cost
An avoidable cost
Internal users of Accounting
internal to the company i.e. managers and owners
External users of Accounting
Any other stakeholder. e.g. employees, competitors and suppliers
4 Characteristics of financial statements (C.U.R.R)
Comparability
Understandability
Relevance
Reliability
Comparability
Financial statments are prepared under universal accounting standards to ensure that
statments afrom various time periods, and entities are comparable
Understandability
Information must be understandable to those with a reasonable knowledge and ability to
study the information
Reliability
Information is free from material era or bias.
Limitation of financial statments
Answers. Verified Solution.
Variable Costs
Those costs that only occur with production. e.g. raw material, direct labour,
manufacturing overhead
Fixed Costs
Those costs that occur regardless of whether production occurs or not e.g. rent, rates,
salary.
Accounting
The process of identifying, recording, and analysing useful economic information to help
the user make decisions.
Relevant Range
The level of activity over which a particular cost behaviour pattern exists.
Prime Costs
Raw materials and Direct labour.
Contribution Margin
Difference between selling price and variable costs.
Contribution Margin Ratio
The portion of each sales (revenue) that remains after covering the variable costs and is
then available to cover fixed cots or provide for a profit.
Break-even Analysis
Determines the activity level required to cover all costs associated with the business.
i.e. profit = 0
Relevant Cost
An avoidable cost
Internal users of Accounting
internal to the company i.e. managers and owners
External users of Accounting
Any other stakeholder. e.g. employees, competitors and suppliers
4 Characteristics of financial statements (C.U.R.R)
Comparability
Understandability
Relevance
Reliability
Comparability
Financial statments are prepared under universal accounting standards to ensure that
statments afrom various time periods, and entities are comparable
Understandability
Information must be understandable to those with a reasonable knowledge and ability to
study the information
Reliability
Information is free from material era or bias.
Limitation of financial statments
