ACCT 2521: Exam 2
19 Cards in this Set
| Front | Back |
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Total variable costs change in ____ proportion to changes in volume
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direct
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Total variable costs can be expressed as
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y=vx
y=total var cost
v=variable cost pr unit of activity
x=volume of activity
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committed fixed costs
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fixed costs that are locked in because of previous mgmt decisions
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discretionary fixed costs
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fixed cots that are a result of annual mgmt decisions; fixed costs that are controllable in the short run
ex. advertising expense
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Fixed cost per guest is ____ proportional to the number of guests
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inversely
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Total mixed costs equation
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Total mixed cost= variable cost component + fixed cost component
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Relevant range
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the band of volume where the following remain constant :
-total fixed costs
-variable cost per unit
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Variable manufacturingcosts
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DM, DL, and variable manufacturing overhead costs such as the utilities used during the production process
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Fixed MOH costs
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property taxes, insurance on the plant, straight line depreciation on the plant lease payments on the production equipment
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variable costing
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the costing method that assigns only variable manufacturing costs to products. all fixed MOH are expensed as period costs
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Under variable costing, fixed MOH is expensed ____ as a period cost (operating expense)
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immediately
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Under absorption costing, fixed MOH becomes part of the ____ _____ of the product, which isn't expensed (as COGS) until the inventory is sold
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inventoriable cost
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Contribution margin income statement
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Sales Rev
-Variable Expenses
CM
-Fixed Expenses
=Net income
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Contribution margin
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amount of profit that will be used to cover fixed costs
CM=Sales Rev-Var Cost
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Margin of safety
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expected sales-breakeven point
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Margin of safety as a percentage
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margin of safety in units/expected sales in units
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relevant information
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expected future data that differs among alternatives
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relevant cost
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a cost that is avoidable, as a result of choosing one alternative over another; it is any cost (or revenue) that differs between the alternatives being considered
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Sunk costs
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Sunk costs
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ACCT 2521: CHAPTER 1