ACCT 2121 Final Review - Pt. 1

Question 1

estimated fixed cost (equation)

Answer 1

1. High TC - Low TC/High Activity - Low Activity = VC/unit
2. High TC - (VC/unit * High Activity) = FC

Question 2

net income increase (equation)

Answer 2

1. Expected Sales Increase * VC % = X; Expected Sales Increase - X = CM
2. CM - Advertising Costs = NI Increase

Question 3

total variable costs (equation - w/ CM)

Answer 3

1. CM/CM Ratio = Total Sales
2. Total Sales - CM = VC

Question 4

total variable costs (equation - w/ SP)

Answer 4

(SP/unit * # of Units) - (Total FC + NI) = VC

Question 5

break-even point (equation - in units)

Answer 5

1. SP/unit - VC/unit = X
2. Total FC/X = BE point

Question 6

break-even point (equation - in dollars)

Answer 6

Total FC/CM Ratio = BE point

Question 7

target net income (equation)

Answer 7

(Total FC + X)/CM Ratio = Req’d Sales Rev
(X= Target NI)

Question 8

req’d sales (equation)

Answer 8

Total FC + Target NI/CM Ratio = req’d sales

Question 9

margin of safety (equation)

Answer 9

1. Total FC/CM Ratio = BE Sales
2. Actual Sales - BE Sales = MoS

Question 10

cm ratio (equation)

Answer 10

(SP/unit - VC/unit)/(SP/unit) = CM Ratio

Question 11

actual sales (equation)

Answer 11

Price * Quantity = AS

Question 12

which of the following is NOT an operating budget?
a. direct labor budget
b. sales budget
c. production budget
d. cash budget

Answer 12

d. cash budget (part of financial budget)

Question 13

which of the following would NOT appear as a fixed expense on a selling and administrative expense budget?
a. freight-out
b. office salaries
c. property taxes
d. depreciation, assuming straight-line

Answer 13

a. freight-out (variable cost)

Question 14

the financing section of a cash budget is needed if there is a cash deficiency or if the ending cash balance is less than:

Answer 14

management’s minimum required cash balance

Question 15

what appears as the separate sections on the cash budget?

Answer 15

beginning cash + cash receipts = total available cash -
cash disbursements = excess/(deficiency) + financing = ending cash

Question 16

units of finished goods to be produced (equation)

Answer 16

Desired Ending FG + Expected Sales - Beginning FG = Units of FG

Question 17

desired ending finished goods (equation)

Answer 17

Expected Sales + X (Desired Ending FG) - Beginning FG = Req’d Production

Question 18

units of raw materials (equation)

Answer 18

Ending Desired RM + RM Req’d - Beginning RM = units of RM

Question 19

direct materials per unit (equation)

Answer 19

Total Units Needed/Units to be Produced = DM/unit

Question 20

amount company would borrow (equation)

Answer 20

Beginning Cash + Cash Receipts - Cash Disbursements + X (Financing) = Ending Cash