ACTG 244 FINAL EXAM QUESTIONS WITH VERIFIED ANSWERS

ACTG 244 FINAL EXAM QUESTIONS WITH VERIFIED
ANSWERS

Variable costs - Answers - Increase/decrease with activity level

Examples of variable costs - Answers - COGS, sales commission, incentive payments

Fixed costs - Answers - Stays the same with activity level; independent from activity
level; doesn't go away

Examples of fixed costs - Answers - Depreciation, rent insurance, salaries, interest on
loans, advertising

Mixed costs (semi-variable) - Answers - Elements of fixed and variable costs; what an
overall company has

Example of mixed costs - Answers - Maintenance, supplies, shipping, utilities

Contribution margin per unit - Answers - Revenue - VC

Contribution margin ratio - Answers - CM / revenue

Break even point (units) - Answers - FC / CM per unit

Break even point ($ of revenue) - Answers - FC / CM ratio

Target profit value (units) - Answers - (FC + target net income) / CM ratio

Target profit value ($ of revenue) - Answers - (FC + target net income) / CM ratio

Income statement - Answers - revenue
-VC
=CM
-FC
= net income

Cost volume profit analysis (CVP) - Answers - Requires we have estimates of FC, VC,
and sales per unit

CVP analysis helps to... - Answers - Identity break even point and impact of changes in
costs for prices on our expected profits

Target profit - Answers - CVP analysis can be used to determine the required level of
sales to attain target profit; added to FC