MA 1 medio chiuso

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Questions and Answers

Which type of cost includes executive, organizational, and clerical costs?

Non-manufacturing costs (correct)

Common costs

Indirect costs

Direct costs

What type of costs are easily traced to a unit of product, such as direct material and direct labor?

Common costs

Direct costs (correct)

Indirect costs

Non-manufacturing costs

What type of costs include manufacturing overhead and cannot be easily traced to a unit of product?

Indirect costs (correct)

Direct costs

Non-manufacturing costs

Common costs

Which type of costs are incurred to support multiple cost objects and cannot be directly associated with a single cost object?

Common costs Signup and view all the answers

What type of costs are relevant for evaluating cost of goods sold and inventory on financial statements?

Product costs Signup and view all the answers

When are product costs attached to a unit of product and remain attached to each unit in inventory until sold?

At the end of the production process Signup and view all the answers

What is the main difference between managerial accounting and financial accounting?

Managerial accounting focuses on providing information for internal use, while financial accounting focuses on providing information for external use. Signup and view all the answers

What is the primary audience for managerial accounting information?

Internal management at all levels of the organization. Signup and view all the answers

How does the scope of managerial accounting differ from financial accounting?

Managerial accounting has a broader scope and uses free formats, while financial accounting follows specific accounting principles. Signup and view all the answers

What type of information does managerial accounting primarily provide?

Quantitative information for internal decision-making. Signup and view all the answers

How does the use of information differ between managerial accounting and financial accounting?

Managerial accounting uses information for internal decision-making, while financial accounting uses information for external reporting. Signup and view all the answers

What distinguishes the formats used in managerial accounting from those used in financial accounting?

Managerial accounting uses free formats, while financial accounting follows specific accounting principles. Signup and view all the answers

Which statement best describes the treatment of direct labor and manufacturing overhead costs in the production process?

They are added to work in process for converting direct materials into finished goods. Signup and view all the answers

What is the characteristic of variable costs in relation to changes in the level of activity?

They vary in direct proportion to changes in the level of activity. Signup and view all the answers

What distinguishes committed fixed costs from discretionary fixed costs?

Committed fixed costs are long-term and cannot be significantly reduced in the short term, while discretionary fixed costs may be altered in the short term by current managerial decisions. Signup and view all the answers

What is the defining characteristic of relevant costs in decision-making?

They depend on the decision-making setting and involve choosing between alternatives. Signup and view all the answers

How are sunk costs treated in decision-making?

They have already been incurred and cannot be changed now or in the future, and should be ignored when making decisions. Signup and view all the answers

For what purpose is the traditional format for income statements primarily used?

External reporting purposes Signup and view all the answers

What is the primary focus of financial accounting?

Companywide reports and compliance with GAAP/IFRS Signup and view all the answers

What is a requirement to become a Certified Management Accountant (CMA)?

Bachelor's degree, two years of relevant professional experience, and passage of the CMA exam Signup and view all the answers

What does the Chartered Global Management Accountant (CGMA) designation require?

Bachelor's degree in accounting, passage of the CPA exam, membership in the AICPA, three years of relevant management accounting work experience, and passage of the CGMA exam Signup and view all the answers

What is the focus of managerial accounting courses?

Teaching measurement skills to support planning, controlling, and decision-making activities, and focusing on cost concepts Signup and view all the answers

What does the Institute of Management Accountants (IMA) estimate about professional accountants in the U.S.?

Over 80% work in non-public accounting environments Signup and view all the answers

What is the emphasis of financial accounting?

Historical perspective and emphasis on objectivity and verifiability Signup and view all the answers

What does the degree of operating leverage (DOL) measure in cost-volume-profit analysis?

The percentage change in profit associated with a change in volume or sales Signup and view all the answers

What does the contribution margin represent in cost-volume-profit analysis?

The amount remaining from sales revenue after variable expenses have been deducted Signup and view all the answers

What does the break-even quantity represent in cost-volume-profit analysis?

The level of sales at which total revenues equal total costs Signup and view all the answers

What does the contribution income statement help managers assess in cost-volume-profit analysis?

The impact on profits of changes in selling price, cost, or volume Signup and view all the answers

What assumption do managers typically make for cost-volume-profit calculations?

Constant selling price, linear costs, and constant product mix Signup and view all the answers

What is the formula for calculating the margin of safety in cost-volume-profit analysis?

Margin of Safety = (Actual Sales - Break-even Sales) / Actual Sales Signup and view all the answers

Study Notes

Applications and Assumptions of Cost-Volume-Profit Analysis

Cost-volume-profit analysis uses the classification of variable versus fixed costs for informative purposes
It helps determine the quantity of break-even or the sales of break-even, essential for a business to stay afloat
The formula for determining break-even quantity is based on a simple equation
The analysis can also be used to determine the targeted income and for simulation or what-if analysis
It can be used to calculate the margin of safety, indicating how safe the company is in terms of reaching the break-even point
The degree of operating leverage (DOL) measures the percentage change in profit associated with a change in volume or sales
Managers typically assume constant selling price, linear costs, and constant product mix for CVP calculations
The contribution income statement helps managers assess the impact on profits of changes in selling price, cost, or volume
The contribution margin is the amount remaining from sales revenue after variable expenses have been deducted
Sales, variable expenses, and contribution margin can be expressed on a per unit basis
The contribution format income statement can be expressed in an equation
It simplifies the estimation of profits at a particular sales volume by multiplying the units sold above break-even by the contribution margin per unit

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Description

Test your knowledge of Cost-Volume-Profit (CVP) analysis with this quiz. Explore the applications and assumptions of CVP analysis, including break-even analysis, targeted income determination, margin of safety, and the contribution income statement. Evaluate your understanding of how CVP analysis aids in decision-making and performance assessment in business.

MA 1 medio chiuso

Podcast

Questions and Answers

Which type of cost includes executive, organizational, and clerical costs?

What type of costs are easily traced to a unit of product, such as direct material and direct labor?

What type of costs include manufacturing overhead and cannot be easily traced to a unit of product?

Which type of costs are incurred to support multiple cost objects and cannot be directly associated with a single cost object?

What type of costs are relevant for evaluating cost of goods sold and inventory on financial statements?

When are product costs attached to a unit of product and remain attached to each unit in inventory until sold?

What is the main difference between managerial accounting and financial accounting?

What is the primary audience for managerial accounting information?

How does the scope of managerial accounting differ from financial accounting?

What type of information does managerial accounting primarily provide?

How does the use of information differ between managerial accounting and financial accounting?

What distinguishes the formats used in managerial accounting from those used in financial accounting?

Which statement best describes the treatment of direct labor and manufacturing overhead costs in the production process?

What is the characteristic of variable costs in relation to changes in the level of activity?

What distinguishes committed fixed costs from discretionary fixed costs?

What is the defining characteristic of relevant costs in decision-making?

How are sunk costs treated in decision-making?

For what purpose is the traditional format for income statements primarily used?

What is the primary focus of financial accounting?

What is a requirement to become a Certified Management Accountant (CMA)?

What does the Chartered Global Management Accountant (CGMA) designation require?

What is the focus of managerial accounting courses?

What does the Institute of Management Accountants (IMA) estimate about professional accountants in the U.S.?

What is the emphasis of financial accounting?

What does the degree of operating leverage (DOL) measure in cost-volume-profit analysis?

What does the contribution margin represent in cost-volume-profit analysis?

What does the break-even quantity represent in cost-volume-profit analysis?

What does the contribution income statement help managers assess in cost-volume-profit analysis?

What assumption do managers typically make for cost-volume-profit calculations?

What is the formula for calculating the margin of safety in cost-volume-profit analysis?

Study Notes

Studying That Suits You

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