Chapter 7 Questions
1. In what fundamental ways does activity-based costing differ from traditional costing methods
such as job-order costing as described in Chapter 3?
a. Activity-based costing differs from traditional costing in three ways. The first is
1. What is meant by a products contribution margin ratio? How is this ratio useful in planning
a. A product's contribution margin ratio shows how the contribution margin will be
affected by a change in total sales.
b. The co
1. Why arent actual manufacturing overhead costs traced to jobs just as direct materials and direct
labor costs are traced to jobs?
a. Overhead costs cannot be practically traced to products or jobs. Overhead costs must be
1. How does managerial accounting differ from financial accounting?
Financial accounting focuses on reporting financial information to external parties, such as stakeholders,
creditors, and regulators. Managerial accounting focuses o
Chapter 12 Questions
3. Are variable costs always relevant?
No, variable costs are only relevant if they differ between alternatives.
5. Variable costs and differential costs mean the same thing? Do you agree? Explain.
No, a variable cost varies based on
a. Asales budget, by rriibnbi and in total.
rmer is mmplete and current
Budgeted unitsales 55,me 1bb,bbbi|_ 215mm
Totalsales $ EEDIJDD $ 1.DDD,DDD $ E $ 2.15D,DDD
b. A schedule dfexbected cash collecbons from sales, by month and in total.
rmer is mmplet