A306 FINAL EXAM QUESTIONS AND ANSWERS | WITH COMPLETE SOLUTION!!
Margin of safety - (ANSWER)The difference between actual or expected sales and sales at the break-
even point.
Margin of safety in $ = actual sales - break even sales
Margin of safety % = (actual sales - break even sales)/actual sales
direct costs - (ANSWER)Costs that can be specifically identified with a particular project or activity.
direct materials
direct labor
indirect costs - (ANSWER)Costs that cannot be easily and accurately traced to a cost object.
- manufacturing overhead
Manufacturing Costs - (ANSWER)direct materials, direct labor, manufacturing overhead
nonmanufacturing costs - (ANSWER)selling costs and administrative costs
prime costs - (ANSWER)costs to primarily make products, helps set selling price to achieve required
profits
- direct materials
- direct labor
conversion costs - (ANSWER)costs that gauge efficiency in the production process
- direct labor
- manufacturing overhead
product costs - (ANSWER)costs that are a necessary and integral part of producing the finished product.
capitalized on the balance sheet and income statement
- manufacturing costs (direct materials, direct labor, MOH)
, A306 FINAL EXAM QUESTIONS AND ANSWERS | WITH COMPLETE SOLUTION!!
period costs - (ANSWER)costs that are taken directly to the income statement as expenses in the period
in which they are incurred or accrued
- nonmanufacuring costs (selling and general and admin.)
variable costs - (ANSWER)costs that vary directly with the level of production
- total cost increases and decreases in proportion to the change in activity level
- per unit cost stays the same
fixed costs - (ANSWER)costs that remain constant as output changes
- total fixed costs not affected by changes in activity level
- per unit cost decreases as the activity level rises and increases as the activity level falls
Total Cost Formula - (ANSWER)TC = (UVC * # of units) + FC
Hi-Lo Pricing - (ANSWER)pricing strategy that starts with a high price, then runs promotions to lower
prices and increase demand; similar to price skimming
- advantages: straightforward to calculate, uses aggregate numbers, subject to data available
- disadvantages: assumes costs are relatively stable, rough estimate
regression analysis - (ANSWER)A method of predicting sales based on finding a relationship between
past sales and one or more independent variables, such as population or income
- advantages: uses all available data, minimizes deviations
disadvantages: needs lots of data, more knowledge and work
Mixed Costs - (ANSWER)costs that have both a fixed and a variable component
differential cost - (ANSWER)a difference in cost between any two alternatives
- incremental, avoidable, differ between options
Margin of safety - (ANSWER)The difference between actual or expected sales and sales at the break-
even point.
Margin of safety in $ = actual sales - break even sales
Margin of safety % = (actual sales - break even sales)/actual sales
direct costs - (ANSWER)Costs that can be specifically identified with a particular project or activity.
direct materials
direct labor
indirect costs - (ANSWER)Costs that cannot be easily and accurately traced to a cost object.
- manufacturing overhead
Manufacturing Costs - (ANSWER)direct materials, direct labor, manufacturing overhead
nonmanufacturing costs - (ANSWER)selling costs and administrative costs
prime costs - (ANSWER)costs to primarily make products, helps set selling price to achieve required
profits
- direct materials
- direct labor
conversion costs - (ANSWER)costs that gauge efficiency in the production process
- direct labor
- manufacturing overhead
product costs - (ANSWER)costs that are a necessary and integral part of producing the finished product.
capitalized on the balance sheet and income statement
- manufacturing costs (direct materials, direct labor, MOH)
, A306 FINAL EXAM QUESTIONS AND ANSWERS | WITH COMPLETE SOLUTION!!
period costs - (ANSWER)costs that are taken directly to the income statement as expenses in the period
in which they are incurred or accrued
- nonmanufacuring costs (selling and general and admin.)
variable costs - (ANSWER)costs that vary directly with the level of production
- total cost increases and decreases in proportion to the change in activity level
- per unit cost stays the same
fixed costs - (ANSWER)costs that remain constant as output changes
- total fixed costs not affected by changes in activity level
- per unit cost decreases as the activity level rises and increases as the activity level falls
Total Cost Formula - (ANSWER)TC = (UVC * # of units) + FC
Hi-Lo Pricing - (ANSWER)pricing strategy that starts with a high price, then runs promotions to lower
prices and increase demand; similar to price skimming
- advantages: straightforward to calculate, uses aggregate numbers, subject to data available
- disadvantages: assumes costs are relatively stable, rough estimate
regression analysis - (ANSWER)A method of predicting sales based on finding a relationship between
past sales and one or more independent variables, such as population or income
- advantages: uses all available data, minimizes deviations
disadvantages: needs lots of data, more knowledge and work
Mixed Costs - (ANSWER)costs that have both a fixed and a variable component
differential cost - (ANSWER)a difference in cost between any two alternatives
- incremental, avoidable, differ between options
