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Quiz Week 8

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:
$1,200
Operating income at a volume of 4,000 units per month is:
$180,000
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?
Planning
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?
It’s 100%.
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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