ACCT 001 Lecture Notes - Lecture 24: Cost Driver, Break Even, Weighted Arithmetic Mean

13 views3 pages

graycricket860

18 Sep 2020

School

College of The Sequoias

Department

Accounting (ACCT)

Course

ACCT 001

Professor

cooper

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

That range over which the assumed fixed cost relationship is valid for the normal operations of an organisation. Fixed costs per unit very inversely with activity: as unit cost changes the level of cost driver changes. Examples of fixed costs: rent per month. In total, vary proportionally with changes in activity level: remain the same on a per unit basis. Examples: meters of fabric, 5% sales commission, /hour wage rate. Cost behaviour is defined with respect to a single, specific cost object/ driver. Some fixed costs do not fit the fixed cost classification completely: fixed over a moderate range of activity and then, rise or fall to new levels beyond that range. Cost function: y = a1, 0

Related Questions

Why is it important to identify the most appropriate costdrivers for a particular product?

A) so managers can identify the activities necessary tomanufacture a product

B) so managers can control product costs better

C) so managers can predict product costs better and make betterdecisions

D) B and C

Answer:

Cost drivers are ________.

A) the different functions in the value chain

B) different types of functional areas in the firm

C) measures of activities that require the use of resources andthereby cause costs

D) different types of cost calculations

Answer:

Within the relevant range, the total amount of ________ costchanges in direct proportion to changes in the cost driver. Withinthe relevant range, the total amount of ________ cost does notchange in direct proportion to changes in the cost driver.

A) fixed; variable

B) variable; fixed

C) step; mixed

D) mixed; step

Answer:

What happens when the cost-driver level increases within therelevant range?

A) Total fixed costs remain unchanged.

B) Fixed costs per unit of cost driver increase.

C) Total variable costs decrease.

D) Variable costs per unit of cost driver increase.

Answer:

Which of the following costs is a fixed cost?

A) cost of dairy ingredients used to produce ice cream

B) depreciation expense on factory building

C) fuel used by delivery trucks

D) labor wages of workers who mix dairy ingredients to make icecream

goldalligator726

________ is the excess of sales over the cost of goods sold.

A) Gross margin

B) Contribution-margin ratio

C) Variable-cost ratio

D) Contribution margin

Answer:

Which statement is FALSE?

A) Each different sales-mix of products has a differentbreak-even point.

B) Changes in the sales-mix of products sold affects a company'snet operating profit.

C) Changes in the sales-mix of products sold affects a company'scontribution margin.

D) If the sales-mix of products sold changes, the break-evenpoint does not change.

Answer:

With mixed costs, the ________ element is unchanged over therelevant range and the ________ element varies proportionately withcost-driver activity.

A) variable cost; fixed cost

B) fixed cost; variable cost

C) fixed cost; step cost

D) step cost; variable cost

Answer:

The sales price is $30 per unit, the contribution margin is $8per unit and total fixed costs are $32,000. What is the break-evenpoint in units?

A) 857

B) 1,200

C) 2,000

D) 4,000

Answer:

If the selling price per unit increases, what is the effect onthe break-even point? (Assume no other changes.)

A) The break-even point increases.

B) The break-even point decreases.

C) The break-even point remains the same.

D) The break-even point is zero.

plumcod490

Fixed costs are costs that remain the same in total dollaramount as the activity base changes. TRUE ORFalse

A relevant range is the range of activity over which the changesin the cost are of no interest. True orFalse

The break-even point is the level of operations at which thecompany has neither a loss nor a profit. True orFalse

As fixed costs increases, the break-even point increases.True or False

FIFO method refers to the fact that the first items in are thelast items out. True or False

Mixed costs are costs that have characteristics of both avariable and fixed costs. True orFalse

An example of an activity base is units produced.True or False

As the unit selling price increases, the break-even pointincreases. True or False

The difference between contribution margin and operatingleverage is fixed charges. True orFalse

whitebee930

ACCT 001 Lecture Notes - Lecture 24: Cost Driver, Break Even, Weighted Arithmetic Mean

Document Summary

Get access

Related Documents

ACCT 001 Lecture Notes - Lecture 20: Cellular Manufacturing, Income Statement, Fixed Cost

ACCT 001 Lecture Notes - Lecture 27: European Cooperation In Science And Technology, Income Statement, Scatter Plot

ACCT 001 Lecture Notes - Lecture 23: Financial Plan, Income Statement, Cost Driver

Related Questions