Managerial Accounting Terms Quiz

What is the formula for contribution margin ratio?

Contribution Margin / Sales Revenue

If a company's break-even sales level is $100,000 and their actual sales amount to $120,000, what is the margin of safety?

$20,000

In terms of operating leverage, what does it indicate if a company has high fixed costs and low variable costs?

High operating leverage and less risky

What is the main factor to consider when choosing among alternatives using differential analysis?

Opportunity costs Signup and view all the answers

Which of the following best describes an incremental cost?

An increase in cost between two alternatives Signup and view all the answers

What characterizes a cost as avoidable when considering different alternatives?

It can be eliminated by choosing one alternative over another Signup and view all the answers

What are the additional decision factors when deciding to drop unprofitable segments?

Employee morale and customer patronage Signup and view all the answers

What does performance benchmarking primarily measure?

Time to market Signup and view all the answers

Which type of benchmarking involves comparing metrics from different areas of the business?

Internal benchmarking Signup and view all the answers

What is the focus of competitive benchmarking?

Looking at data from other organizations Signup and view all the answers

Which metric is NOT typically used in performance benchmarking?

Margin of safety Signup and view all the answers

In what way does strategic benchmarking differ from competitive benchmarking?

Compares against top performers Signup and view all the answers

What is the formula for calculating the contribution margin ratio?

Contribution Margin / Sales Revenue Signup and view all the answers

In break-even analysis, what does the term 'margin of safety' refer to?

The amount of sales revenue above the break-even point Signup and view all the answers

Which of the following statements is true about operating leverage?

Operating leverage increases the variability of profits. Signup and view all the answers

What is the break-even point in terms of units?

Total fixed costs / Contribution margin per unit Signup and view all the answers

How is the contribution margin per unit calculated?

(Sales Revenue - Total Variable Costs) / Total Units Sold Signup and view all the answers

Which of the following best describes the concept of break-even in a business setting?

A point where a business just covers its total fixed and variable costs through sales Signup and view all the answers