Managerial Accounting Terms Quiz
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Questions and Answers

What is the formula for contribution margin ratio?

  • Variable Costs / Sales Revenue
  • Net Income / Sales Revenue
  • Contribution Margin / Sales Revenue (correct)
  • Fixed Costs / 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?

  • $120,000
  • $40,000
  • $20,000 (correct)
  • $100,000
  • In terms of operating leverage, what does it indicate if a company has high fixed costs and low variable costs?

  • No impact on operating leverage
  • High operating leverage and less risky (correct)
  • Moderate operating leverage and moderate risk
  • Low operating leverage and more risky
  • What is the main factor to consider when choosing among alternatives using differential analysis?

    <p>Opportunity costs</p> Signup and view all the answers

    Which of the following best describes an incremental cost?

    <p>An increase in cost between two alternatives</p> Signup and view all the answers

    What characterizes a cost as avoidable when considering different alternatives?

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

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

    <p>Employee morale and customer patronage</p> Signup and view all the answers

    What does performance benchmarking primarily measure?

    <p>Time to market</p> Signup and view all the answers

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

    <p>Internal benchmarking</p> Signup and view all the answers

    What is the focus of competitive benchmarking?

    <p>Looking at data from other organizations</p> Signup and view all the answers

    Which metric is NOT typically used in performance benchmarking?

    <p>Margin of safety</p> Signup and view all the answers

    In what way does strategic benchmarking differ from competitive benchmarking?

    <p>Compares against top performers</p> Signup and view all the answers

    What is the formula for calculating the contribution margin ratio?

    <p>Contribution Margin / Sales Revenue</p> Signup and view all the answers

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

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

    Which of the following statements is true about operating leverage?

    <p>Operating leverage increases the variability of profits.</p> Signup and view all the answers

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

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

    How is the contribution margin per unit calculated?

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

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

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

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