University:
Grand Rapids Community College
Course:
Financial and Managerial Accounting: Information for Decisions - John J. Wild
Academic year:

2024
Views:

70

Pages:

2
Author:

stud_ice13

These Quick Study questions help you apply principles of cost behavior, contribution margin, and cost-volume-profit (CVP) analysis in a series of practice exercises. Below are brief explanations of how to approach each question set: QS 18-1 to QS 18-3: Identifying and Classifying Costs • • QS 18-1 and 18-2: For each cost, determine if it’s fixed, variable, or mixed based on how it changes with production levels. Fixed costs remain constant regardless of production, variable costs vary proportionally, and mixed costs have both fixed and variable elements. QS 18-3: Classify costs by examining three levels of production data to see if the costs change, stay constant, or include both fixed and variable components. QS 18-4 to QS 18-6: High-Low Method and Scatter Diagrams • • • QS 18-4: Use the high-low method to estimate the fixed and variable portions of a mixed cost by taking the highest and lowest activity levels and corresponding costs. QS 18-5: Review a scatter diagram to see if costs appear fixed, variable, or mixed based on trends or scatter patterns. QS 18-6: Calculate the contribution margin ratio, which is the contribution margin (Sales - Variable Costs) as a percentage of sales. QS 18-7 to QS 18-12: Contribution Margin, Break-even Analysis, and Income Statements • • • • QS 18-7: Solve for missing elements of the contribution margin and related components based on provided data. QS 18-8 and 18-9: Calculate contribution margin per unit and break-even points in units or dollars for a product, knowing the price, variable cost, and fixed costs. QS 18-10 and 18-11: Determine break-even units or create a contribution margin income statement with given fixed costs, sales, and variable costs. QS 18-12: Solve for missing break-even components by rearranging formulas for contribution margin and break-even points. QS 18-13 to QS 18-16: Margin of Safety, CVP Chart, and Break-even Analysis • • • QS 18-13: Compute break-even in units and margin of safety, which is the cushion between expected sales and break-even. QS 18-14 and 18-15: Use CVP chart details to interpret and match descriptions of areas like the break-even point, profit, and total cost lines. QS 18-16: Analyze how changes in costs or sales price impact the breakeven point. QS 18-17 to QS 18-20: Target Income and Margin of Safety Analysis • • • QS 18-17 and 18-18: Determine units required to meet target income and calculate the margin of safety. QS 18-19: Compute units required to reach a specific target income. QS 18-20: Adjust a contribution margin income statement based on changes in sales volume. QS 18-21 to QS 18-26: Sales Mix, Operating Leverage, and Costing Income Statements • • • • QS 18-21: Calculate break-even sales based on a mix of products with differing contribution margins. QS 18-22: Compute operating leverage, which measures income sensitivity to changes in sales, and predict income changes based on sales variations. QS 18-23B and 18-24B: Calculate product cost per unit under absorption and variable costing. QS 18-25B and 18-26B: Prepare income statements using absorption and variable costing for a manufacturer with given production, sales, and cost data. Would you like step-by-step solutions for any specific questions?