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Comprehensive Managerial Accounting Part I: True or False Question and Fill in Blank. T or F: The planning horizon for a discretionary fixed cost...

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Comprehensive Managerial Accounting Part I : True or False Question and Fill in Blank. 1. T or F : The planning horizon for a discretionary fixed cost usually encompasses many years. 2. Tor F : Committed fixed costs are those that relate to the investment in facilities, equipment and the basic organizational structure of a company. 3. T or F : The high-low method uses cost and activity data from just two extreme volume levels (periods) to establish a cost formula. 4. T or F : On an income statement prepared by the traditional approach, costs are organized and presented according to function. 5. T or F : Contribution margin is defined as sales less discretionary fixed costs. 6. T or F : The contribution format is widely used for preparing external financial statements. 7. T or F : Reynold Enterprises sells a single product for $25. The variable expense per unit is $15 and the fixed expense per unit is $5 at the current level of sales. The company's net operating income will increase by $5 if one more unit is sold over BEP. 8. T or F : Incremental analysis is an analytical approach that focuses on those items of revenue and cost that will change as a result of a decision. 9. T or F : On a CVP graph for a profitable company, the total revenue line will be steeper than the total expense line. 10. T or F : The impact on net operating income of a given dollar change in sales can be computed by applying the contribution margin ratio to the dollar change in sales. 11. T or F : The larger the contribution margin ratio, the smaller the amount of sales required to cover a given amount of fixed expenses. 12. T or F : Fawn Company's margin of safety is $90,000. If the company's sales drop by $80,000, it will still have positive net operating income. 13. T or F : The margin of safety can be defined as the amount by which sales can decrease before losses are incurred by the company. 14. Mark Company currently sells a video recorder with a selling price of $300 per unit. The variable expense per unit is $175 and fixed expenses are $100,000. If the company reduces variable expenses by $20 per unit and increases the fixed expenses by $10,000, the break-even point will __increase or decrease __. 15. The degree of operating leverage is computed by dividing contribution margin by ______________. 16. The variable expense per unit is $12 and the selling price per unit is $40. Then the contribution margin ratio is _____________%. 17. Long Company’s variables expenses are 60% of sales. A $1,200 increase in the company’s fixed expenses will increase the break-even point in sales by $ _______________. Part II : Classification of Costs as Period or Product Cost 1. ______________ Depreciation on salespersons’ cars. 2. ______________ Rent on equipment used in the factory. 3. ______________ Lubricants used for maintenance of machines. 4. ______________ Salaries of finished goods warehouse personnel. 5. ______________ Soap and paper towels used by factory workers at the end of a shift. 6. ______________ Factory supervisors’ salaries. 7. ______________ Heat, water, and power consumed in the factory. 8. ______________ Advertising costs. 9. ______________ Workers’ compensation insurance on factory employees. 10. ______________ Attractively designed box for packaging the company’s product.
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Comprehensive Managerial Accounting
Part I: True or False Question and Fill in Blank.
1. T or F: The planning horizon for a discretionary fixed cost usually encompasses many years. FALSE 2. Tor F:...

This question was asked on Jan 21, 2013 and answered on Jan 22, 2013.

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