Management accounting is:
an activity that gets involved with virtually all of the other functional areas of the organization
The contribution margin format income statement:
uses a behavior pattern classification for costs rather than a functional cost classification approach
Operating income using the contribution margin format income statement is calculated as
revenue – variable expenses = contribution margin – fixed expenses
The term “relevant range” refers to:
the range of activity where cost relationships are valid
ABU Co. has several products, each with a different contribution margin ratio. If the same number of units were sold in July as in June, but the sales mix changed:
total contribution margin in July would be different from that in June.
Using the high-low method, the monthly fixed component of maintenance cost is:
Operating income at a volume of 4,000 units per month is:
The contribution margin ratio always decreases when the:
variable cost increase and the selling price remains constant
Which of the following statements does not describe a characteristic of management accounting?
Management accounting must conform to GAAP
The contribution margin format income statement is organized by:
cost behavior classifications
As the total volume of activity changes
the total of variable costs changes
To which function of management is CVP analysis most applicable?
Expressing fixed costs on a per unit basis of activity is misleading because
fixed cost per unit decrease as activity increases
The relevant range concept refers to:
a firm’s range of activity.
The cost of a single unit of production in excess of the breakeven point in units is:
its variable cost only
What percentage of the contribution margin is profit on units sold in excess of the breakeven point?
Each of a company’s several product lines has a different contribution margin ratio. Total sales in 2011 were 20% higher than total sales in 2010. Total contribution margin for 2011 will be:
more than 20% higher than it was in 2010, if the sales mix changes and proportionately more high contribution margin ratio products are sold in 2011 than in 2010.
An example of a cost likely to have a mixed behavior pattern is:
electricity cost for the manufacturing plant.
When a cost formula is used to describe a mixed (semi-variable) cost behavior pattern, total costs are expected to increase and per unit costs are expected to:
remain constant as the level of activity increases.
Knowledge about the behavior pattern of a cost is important to understanding the effect on net income of a change in sales volume because as sales volume changes:
the effect on net income will depend on the behavior pattern of various costs.
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