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Accounting Final
Chapter 11
| Question | Answer |
|---|---|
| the manner in which a cost changes as a related activity changes | cost behavior |
| costs that vary in proportion to changes in the activity base | variable cost |
| when the activity base is units produced, direct materials and direct labor costs are normally classified as... | variable costs |
| costs that remain the same in total dollar amount as the activity base changes | fixed costs |
| costs that have characteristics of both a variable and a fixed cost | mixed costs |
| variable cost per unit= | difference in total cost/ difference in production |
| fixed costs= | total cost-(variable cost per unit X units produced) |
| total cost= | (variable cost per unit X units produced)+ fixed costs |
| examination of the relationships among selling prices, sales and production volume, costs, expenses, and profits | cost-volume-profit analysis |
| contribution margin= | sales-variable costs |
| contribution margin-fixed costs= | income from operations |
| contribution margin ratio= | contribution margin/ sales |
| change in income from operations= | change in sales dollars X contribution margin ratio |
| break even sales= | fixed costs/ unit contribution margin |
| to earn a target profit | sales= (fixed costs + target profit)/ unit contribution margin |
| operating leverage= | contribution margin/ income from operations |
| Fixed costs | building depreciation, plant manager salary, property insurance, property taxes, branch manager salary |
| variable costs | instructor salaries, fuel, direct materials, wages |
Created by:
kec0010
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