Managerial Accounting Questions
A standard costing system - ✔✔helps an organization in future planning
activity based costing - ✔✔is most useful in multi-product or multi-service organizations
activity based costing - ✔✔may help in reducing the gap between applied and actual overhead
an activity cost pool - ✔✔helps management assign costs to cost objects
an espresso stand in a downtown office building. average selling price of a cup of coffee is $1.49 and the
average variable expense per cup is $0.36. the average fixed expense per month is $1,300. 2,100 cups
are sold each month on average. if sales increase by 20%, by how much should net income increase? -
✔✔percent increase in sales 20%
x degree of operating leverage 2.21
percent increase in profit = 20% x 2.21 = 44.20%
an espresso stand in a downtown office building. average selling price of a cup of coffee is $1.49 and the
average variable expense per cup is $0.36. the average fixed expense per month is $1,300. 2,100 cups
are sold each month on average. what is the break-even sales in units? in dollars? - ✔✔breakeven
quantity = F / cm
= 1,300 / (1.49 - 0.36)
= 1,150 units
break even sales = F / CM ratio
= 1,.758
= $1,715
an espresso stand in a downtown office building. average selling price of a cup of coffee is $1.49 and the
average variable expense per cup is $0.36. the average fixed expense per month is $1,300. 2,100 cups
are sold each month on average. what is the CM ratio for the coffee shop - ✔✔CM ratio = cm / selling
price
, (selling price - variable cost) / selling price
= (1.49 - 0.36) / 1.49
= 0.758
an espresso stand in a downtown office building. average selling price of a cup of coffee is $1.49 and the
average variable expense per cup is $0.36. the average fixed expense per month is $1,300. 2,100 cups
are sold each month on average. what is the margin of safety? - ✔✔margin of safety = total sales -
breakeven sales
= 2,100 cups - 1,150 cups
= 950 cups
OR
,100 cups = 45%
an espresso stand in a downtown office building. average selling price of a cup of coffee is $1.49 and the
average variable expense per cup is $0.36. the average fixed expense per month is $1,300. 2,100 cups
are sold each month on average. what is the operating leverage? - ✔✔Actual sales = 2,100 cups
Sales $3,129
less: variable exp. (756)
contribution margin 2,373
less: fixed exp (1,300)
net income $1,073
operating leverage = contribution margin / net income
= 2,,073 = 2.21
an espresso stand in a downtown office building. average selling price of a cup of coffee is $1.49 and the
average variable expense per cup is $0.36. the average fixed expense per month is $1,300. how many
cups of coffee would have to be sold to attain target profits of $2,500 per month? - ✔✔quantity to
attain target = F + target profit / cm
A standard costing system - ✔✔helps an organization in future planning
activity based costing - ✔✔is most useful in multi-product or multi-service organizations
activity based costing - ✔✔may help in reducing the gap between applied and actual overhead
an activity cost pool - ✔✔helps management assign costs to cost objects
an espresso stand in a downtown office building. average selling price of a cup of coffee is $1.49 and the
average variable expense per cup is $0.36. the average fixed expense per month is $1,300. 2,100 cups
are sold each month on average. if sales increase by 20%, by how much should net income increase? -
✔✔percent increase in sales 20%
x degree of operating leverage 2.21
percent increase in profit = 20% x 2.21 = 44.20%
an espresso stand in a downtown office building. average selling price of a cup of coffee is $1.49 and the
average variable expense per cup is $0.36. the average fixed expense per month is $1,300. 2,100 cups
are sold each month on average. what is the break-even sales in units? in dollars? - ✔✔breakeven
quantity = F / cm
= 1,300 / (1.49 - 0.36)
= 1,150 units
break even sales = F / CM ratio
= 1,.758
= $1,715
an espresso stand in a downtown office building. average selling price of a cup of coffee is $1.49 and the
average variable expense per cup is $0.36. the average fixed expense per month is $1,300. 2,100 cups
are sold each month on average. what is the CM ratio for the coffee shop - ✔✔CM ratio = cm / selling
price
, (selling price - variable cost) / selling price
= (1.49 - 0.36) / 1.49
= 0.758
an espresso stand in a downtown office building. average selling price of a cup of coffee is $1.49 and the
average variable expense per cup is $0.36. the average fixed expense per month is $1,300. 2,100 cups
are sold each month on average. what is the margin of safety? - ✔✔margin of safety = total sales -
breakeven sales
= 2,100 cups - 1,150 cups
= 950 cups
OR
,100 cups = 45%
an espresso stand in a downtown office building. average selling price of a cup of coffee is $1.49 and the
average variable expense per cup is $0.36. the average fixed expense per month is $1,300. 2,100 cups
are sold each month on average. what is the operating leverage? - ✔✔Actual sales = 2,100 cups
Sales $3,129
less: variable exp. (756)
contribution margin 2,373
less: fixed exp (1,300)
net income $1,073
operating leverage = contribution margin / net income
= 2,,073 = 2.21
an espresso stand in a downtown office building. average selling price of a cup of coffee is $1.49 and the
average variable expense per cup is $0.36. the average fixed expense per month is $1,300. how many
cups of coffee would have to be sold to attain target profits of $2,500 per month? - ✔✔quantity to
attain target = F + target profit / cm
