Strayer ACC560 WK 5 Quiz 6
ACC 560 WK 5 Quiz 61. The CVP earnings assertion classifies prices as variable or mounted and computes a contribution margin.2. In CVP evaluation, price consists of manufacturing prices however not promoting and administrative bills.three. When an organization is in its early levels of operation, its major objective is to generate a goal internet earnings.four. The margin of security tells an organization how far gross sales can drop earlier than it is going to be working at a loss.5. Gross sales combine is a measure of the share enhance in gross sales from interval to interval.6. Gross sales combine isn't necessary to managers when totally different merchandise have considerably totally different contribution margins.7. The weighted-average contribution margin of all of the merchandise is computed when figuring out the break-even gross sales for a multi-product agency.eight. If Buttercup, Inc. sells two merchandise with a gross sales mixture of 75% : 25%, and the respective contribution margins are $80 and $240, then weighted-average unit contribution margin is $120.9. If mounted prices are $100,000 and weighted-average unit contribution margin is $50, then the break-even level in items is 2,000 items.10. Internet earnings could be elevated or decreased by altering the gross sales combine.11. The break-even level in is variable prices divided by the weighted-average contribution margin ratio.12. When an organization has restricted assets, administration should determine which merchandise to make and promote with the intention to maximize internet earnings.13. When an organization has restricted assets to fabricate merchandise, it ought to manufacture these merchandise which have the best contribution margin per unit.14. If an organization has restricted machine hours obtainable for manufacturing, it's typically extra worthwhile to provide and promote the product with the best contribution margin per machine hour.15. Based on the idea of constraints, an organization should determine its constraints and discover methods to scale back or get rid of them.16. Price construction refers back to the relative proportion of mounted versus variable prices that an organization incurs.17. Working leverage refers back to the extent to which a company’s internet earnings reacts to a given change in mounted prices.18. The diploma of working leverage supplies a measure of a company’s earnings volatility.19. If Sprinkle Industries has a margin of security ratio of .60, it may maintain a 60 % decline in gross sales earlier than it will be working at a loss.20. An organization with low working leverage will expertise a pointy enhance in internet earnings with a given enhance in gross sales.a21. Variable costing is the method used for exterior reporting underneath typically accepted accounting rules.a22. The distinction between absorption costing and variable costing is the remedy of mounted manufacturing overhead.a23. Promoting and administrative prices are interval prices underneath each absorption and variable costing.a24. Manufacturing price per unit shall be larger underneath variable costing than underneath absorption costing.a25. Some mounted manufacturing prices of the present interval are deferred to future durations via ending stock underneath variable costing.a26. When items produced exceed items offered, earnings underneath absorption costing is larger than earnings underneath variable costing.a27. When items offered exceed items produced, earnings underneath absorption costing is larger than earnings underneath variable costing.a28. When absorption costing is used for exterior reporting, variable costing can nonetheless be used for inside reporting functions.a29. When absorption costing is used, administration could also be tempted to overproduce in a given interval with the intention to enhance internet earnings.a30. The usage of absorption costing facilitates cost-volume-profit evaluation.