AC 202 FINAL EXAM
if a per-unit cost remains constant over a wide range of volume, the cost is most likely a -
ANSvariable cost
the cost per unit decreases as volume increases for what cost behavior(s): fixed, variable, mixed
- ANSfixed and mixed costs
in the mixed cost equation what amount represents the total variable cost component - ANSvx
equation: y=vx+f
what method is used to see if a relationship between the cost driver and total cost exists -
ANSscatter plot
what kind of cost is this: as production increases, total cost increases and cost per unit stays the
same - ANSvariable costs
what kind of cost is this: as production increases, total cost remains the same and cost per unit
decreases - ANSfixed costs
what kind of cost is this: as production increases, total cost increases and cost per unit
increases - ANSmixed costs
(as long as both change. this can be an increase or decrease in total and per-unit costs)
when choosing the high point for the high-low method, how is the high point selected? - ANSthe
point with the highest VOLUME is chosen
what is the advantage of using regression analysis to determine the cost equation - ANS- it is
objective
- it will generally be more accurate than the high-low method
- all the data points are used to calculate the cost equations
what is the only difference between variable costing and absorption costing - ANSthe treatment
of fixed manufacturing overhead costs
when inventories decline, operating income under variable costing is........ compared to
absorption costing - ANShigher than operating income under absorption costing
what is the formula for the variable cost (slope) in the high-low method - ANSchange in cost
divided by the change in volume
, if the sales price of a product increases while everything else remains the same, what happens
to the breakeven point? - ANSthe breakeven point will decrease
target profit analysis is used to calculate the sales volume that is needed to - ANSearn a
specific amount of net operating income
a shift in the sales mix from a product with a high contribution margin ratio toward a product with
a low contribution margin ratio will cause the breakeven point to - ANSincrease
if the degree of operating leverage is 3, then a 2% change in the number of units sold should
result in a..... change in - ANS6% change in operating income
margin of safety - ANSthe excess of expected sales over breakeven sales
formula to find the target sales in dollars - ANS(fixed expenses + operating income) /
contribution margin ratio
contribution margin ratio - ANScontribution margin per unit / sales price
OR
contribution margin total / sales revenue
contribution margin per unit - ANSsales price per unit less variable costs per unit
formula to find the target sales in units - ANS(fixed expenses + operating income) / contribution
margin per unit
operating income if you breakeven - ANSzero dollars
variable costs - ANS- the total amount changes in direct proportion to changes in volume
- per unit remains constant
cost graph - ANS- costs are on the vertical axis
- volume is on the horizontal axis
what do the variable cost and fixed costs graphs look like - ANSvariable has a slope (y=x)
fixed is a straight line over the relevant range (y=2)
can be total for all labels (total salaries on the y axis and total sales on the x axis)
cost equation - ANS- y= vx+f
- y= total mixed costs
- mathematical equation for a straight line, to predict total cost
fixed costs - ANS- the total amount stays constant over a relevant range
- the per unit cost varies inversely with changes in volume
if a per-unit cost remains constant over a wide range of volume, the cost is most likely a -
ANSvariable cost
the cost per unit decreases as volume increases for what cost behavior(s): fixed, variable, mixed
- ANSfixed and mixed costs
in the mixed cost equation what amount represents the total variable cost component - ANSvx
equation: y=vx+f
what method is used to see if a relationship between the cost driver and total cost exists -
ANSscatter plot
what kind of cost is this: as production increases, total cost increases and cost per unit stays the
same - ANSvariable costs
what kind of cost is this: as production increases, total cost remains the same and cost per unit
decreases - ANSfixed costs
what kind of cost is this: as production increases, total cost increases and cost per unit
increases - ANSmixed costs
(as long as both change. this can be an increase or decrease in total and per-unit costs)
when choosing the high point for the high-low method, how is the high point selected? - ANSthe
point with the highest VOLUME is chosen
what is the advantage of using regression analysis to determine the cost equation - ANS- it is
objective
- it will generally be more accurate than the high-low method
- all the data points are used to calculate the cost equations
what is the only difference between variable costing and absorption costing - ANSthe treatment
of fixed manufacturing overhead costs
when inventories decline, operating income under variable costing is........ compared to
absorption costing - ANShigher than operating income under absorption costing
what is the formula for the variable cost (slope) in the high-low method - ANSchange in cost
divided by the change in volume
, if the sales price of a product increases while everything else remains the same, what happens
to the breakeven point? - ANSthe breakeven point will decrease
target profit analysis is used to calculate the sales volume that is needed to - ANSearn a
specific amount of net operating income
a shift in the sales mix from a product with a high contribution margin ratio toward a product with
a low contribution margin ratio will cause the breakeven point to - ANSincrease
if the degree of operating leverage is 3, then a 2% change in the number of units sold should
result in a..... change in - ANS6% change in operating income
margin of safety - ANSthe excess of expected sales over breakeven sales
formula to find the target sales in dollars - ANS(fixed expenses + operating income) /
contribution margin ratio
contribution margin ratio - ANScontribution margin per unit / sales price
OR
contribution margin total / sales revenue
contribution margin per unit - ANSsales price per unit less variable costs per unit
formula to find the target sales in units - ANS(fixed expenses + operating income) / contribution
margin per unit
operating income if you breakeven - ANSzero dollars
variable costs - ANS- the total amount changes in direct proportion to changes in volume
- per unit remains constant
cost graph - ANS- costs are on the vertical axis
- volume is on the horizontal axis
what do the variable cost and fixed costs graphs look like - ANSvariable has a slope (y=x)
fixed is a straight line over the relevant range (y=2)
can be total for all labels (total salaries on the y axis and total sales on the x axis)
cost equation - ANS- y= vx+f
- y= total mixed costs
- mathematical equation for a straight line, to predict total cost
fixed costs - ANS- the total amount stays constant over a relevant range
- the per unit cost varies inversely with changes in volume
