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Flashcards in Cost Accounting Deck (463):
1

What is job costing?

A method of recording the costs of a manufacturing job, rather than process.

2

Job Costing is defined as a method of _______________, rather than process. With job costing systems, a project manager or accountant can keep track of the cost of each job, maintaining data which is often more relevant to the operations of the business

recording the costs of a manufacturing job

3

Job costing is defined as a method of _____________ of a manufacturing job, rather than process. With job costing systems, a project manager or accountant can keep track of the cost of each job, maintaining data which is often more relevant to the operations of the business.

recording the costs

4

________. With job costing systems, a project manager or accountant can keep track of the cost of each job, maintaining data which is often more relevant to the operations of the business.

Process

5

When is job costing used?

in situations where each job is different and is performed to the customer's specifications.

6

Job costing is an _____________ costing technique.

Order specific

7

Job costing is used when in situations where ______________ and is performed to the customer's specifications.

Each job is different

8

Job costing is used when in situations where each job is different and is _________________

performed to the customer's specifications

9

Job costing involves keeping an account of direct and ____________________.

Indirect costs

10

Job costing involves keeping an account of ____________ and indirect costs.

Direct

11

Since both types of costs are usually closely related (a job requiring high input of labour and material is likely to consume more power, machine time, supervision time, inspection time, etc.) indirect costs may be applied as an estimated fraction of ______________.

Direct costs

12

Since both types of costs are usually closely related (a job requiring high input of labour and material is likely to consume more power, machine time, supervision time, inspection time, etc.) _____________costs may be applied as an estimated fraction of direct costs.

Indirect

13

Job costing methods are ____________contract costing and batch costing methods, and are used in construction, motion picture, and shipping industries, in fabrication, repair, and maintenance works, and in services such as auditing.

Similar to

14

Job costing methods are similar to _____________ and batch costing methods, and are used in construction, motion picture, and shipping industries, in fabrication, repair, and maintenance works, and in services such as auditing.

Contract costing

15

Job costing methods are similar to contract costing and ______________ methods, and are used in construction, motion picture, and shipping industries, in fabrication, repair, and maintenance works, and in services such as auditing.

Batch costing

16

Job costing methods are similar to contract costing and batch costing methods, and are used in ____________, motion picture, and shipping industries, in fabrication, repair, and maintenance works, and in services such as auditing.

construction

17

Job costing methods are similar to contract costing and batch costing methods, and are used in construction, _____________, and shipping industries, in fabrication, repair, and maintenance works, and in services such as auditing.

Motion picture

18

Job costing methods are similar to contract costing and batch costing methods, and are used in construction, motion picture, and shipping industries, in fabrication, repair, and ______________works, and in services such as auditing.

maintenance

19

Job costing methods are similar to contract costing and batch costing methods, and are used in construction, motion picture, and shipping industries, in fabrication, repair, and maintenance works, and in services such as _____________.

auditing.

20

Contract costing is a way of providing a ___________ for especially large and long term projects that will usually be performed over a number of accounting periods. For example, large civil engineering projects will often involve a business using contract costing when estimating the cost of participating in the project.

Quotation

21

Contract costing is a way of providing a quotation for especially ___________ and long term projects that will usually be performed over a number of accounting periods. For example, large civil engineering projects will often involve a business using contract costing when estimating the cost of participating in the project.

large

22

Contract costing is a way of providing a quotation for especially large and long term projects that will usually be performed over a number of accounting periods. For example, large civil engineering projects will often involve a business using contract costing when estimating the cost of participating in the project.

long term

23

_______________is a way of providing a quotation for especially large and long term projects that will usually be performed over a number of accounting periods. For example, large civil engineering projects will often involve a business using ____________ when estimating the cost of participating in the project.

Contact costing

24

_______________involves the accumulation of the costs of materials, labour, and overhead for a specific job. This approach is an excellent tool for tracing specific costs to individual jobs and examining them to see if the costs can be reduced in later jobs. An alternative use is to see if any excess costs incurred can be billed to a customer.

Job costing

25

Job costing involves the accumulation of the costs of materials, labour, and overhead for a specific job. This approach is an excellent tool for___________specific costs to individual jobs and examining them to see if the costs can be reduced in later jobs. An alternative use is to see if any excess costs incurred can be billed to a customer.

tracing

26

Job costing involves the accumulation of the costs of materials, labour, and overhead for a specific job. This approach is an excellent tool for tracing specific costs to individual jobs and examining them to see if the costs can be reduced in later jobs. An alternative use is to see if any excess costs incurred can be __________ to a customer.

billed

27

Job costing is used to accumulate costs at a __________ level. For example, job costing is appropriate for deriving the cost of constructing a custom machine, designing a software program, constructing a building, or manufacturing a small batch of products.

Small-unit

28

for deriving the cost of constructing a custom machine, designing a software program, constructing a building, or manufacturing a small ______ of products.

Batch

29

Job costing involves the following accounting activities:
_________. It accumulates the cost of components and then assigns these costs to a product or project once the components are used.
Labour. Employees charge their time to specific jobs, which are then assigned to the jobs based on the labour cost of the employees.
Overhead. It accumulates overhead costs in cost pools, and then allocates these costs to jobs.

Materials

30

Materials. It accumulates the cost of components and then assigns these costs to a product or project once the components are used.
________. Employees charge their time to specific jobs, which are then assigned to the jobs based on the labour cost of the employees.
Overhead. It accumulates overhead costs in cost pools, and then allocates these costs to jobs.

Labour

31

Materials. It accumulates the cost of components and then assigns these costs to a product or project once the components are used.
Labour. Employees charge their time to specific jobs, which are then assigned to the jobs based on the labour cost of the employees.
___________. It accumulates overhead costs in cost pools, and then allocates these costs to jobs

Overhead

32

Job costing results in discrete _______ of information about each job that the cost accountant can review to see if it really should be assigned to that job. If there are many jobs currently in progress, there is a strong chance that costs will be incorrectly assigned, but the very nature of the job costing system makes it highly auditable.

buckets

33

Job costing results in discrete “buckets” of information about each job that the cost accountant can review to see if it really should be assigned to that job. If there are many jobs currently in progress, there is a strong chance that costs will be incorrectly ___________, but the very nature of the job costing system makes it highly auditable.

assigned

34

Job costing results in discrete “buckets” of information about each job that the cost accountant can review to see if it really should be assigned to that job. If there are many jobs currently in progress, there is a strong chance that costs will be incorrectly assigned, but the very nature of the job costing system makes it highly ___________.

Auditable

35

If a job is expected to run for a long period of time, then the cost accountant can periodically compare the costs accumulated in the bucket for that job to its _________, and give management advance warning if costs appear to be running ahead of projections. This gives management time to either get costs under control over the remainder of the project, or possibly to approach the customer about a billing increase to cover some or all of the cost overrun.

budget

36

If a job is expected to run for a long period of time, then the cost accountant can periodically compare the costs accumulated in the bucket for that job to its budget, and give management advance warning if costs appear to be running ahead of ___________. This gives management time to either get costs under control over the remainder of the project, or possibly to approach the customer about a billing increase to cover some or all of the cost overrun.

projections

37

If a job is expected to run for a long period of time, then the cost accountant can periodically compare the costs accumulated in the bucket for that job to its budget, and give management advance warning if costs appear to be running ahead of projections. This gives management time to either get costs under _________over the remainder of the project, or possibly to approach the customer about a billing increase to cover some or all of the cost overrun.

control

38

If a job is expected to run for a long period of time, then the cost accountant can periodically compare the costs accumulated in the bucket for that job to its budget, and give management advance warning if costs appear to be running ahead of projections. This gives management time to either get costs under control over the remainder of the project, or possibly to approach the ___________ about a billing increase to cover some or all of the cost overrun.

Customer

39

Job costing demands a considerable amount of costing precision if costs are to be reimbursed by customers (as is the case in a ______________, where the customer pays all costs incurred, plus a profit). In such cases, the cost accountant must carefully review the costs assigned to each job before releasing it to the billing staff, which creates a customer invoice. This can cause long hours for the cost accountant at the end of a job, since the company controller will want to issue an invoice as soon as possible.

cost-plus contract

40

Job costing demands a considerable amount of costing precision if costs are to be reimbursed by customers (as is the case in a cost-plus contract, where the customer pays all costs incurred, plus a profit). In such cases, the cost accountant must carefully review the costs assigned to each job before releasing it to the ___________ staff, which creates a customer invoice. This can cause long hours for the cost accountant at the end of a job, since the company controller will want to issue an invoice as soon as possible.

billing

41

Job Costing Allocation of Materials
In a job costing environment, materials to be used on a product or project first enter the facility and are stored in the warehouse, after which they are picked from stock and issued to a specific job. If ________or scrap is created, then normal amounts are charged to an overhead cost pool for later allocation, while abnormal amounts are charged directly to the cost of goods sold. Once work is completed on a job, the cost of the entire job is shifted from work-in-process inventory to finished goods inventory. Then, once the goods are sold, the cost of the asset is removed from the inventory account and shifted into the cost of goods sold, while the company also records a sale transaction.

spoilage

42

Job Costing Allocation of Materials
In a job costing environment, materials to be used on a product or project first enter the facility and are stored in the warehouse, after which they are picked from stock and issued to a specific job. If spoilage or scrap is created, then normal amounts are charged to an overhead cost pool for later allocation, while __________amounts are charged directly to the cost of goods sold. Once work is completed on a job, the cost of the entire job is shifted from work-in-process inventory to finished goods inventory. Then, once the goods are sold, the cost of the asset is removed from the inventory account and shifted into the cost of goods sold, while the company also records a sale transaction.

abnormal

43

Job Costing Allocation of Materials
In a job costing environment, materials to be used on a product or project first enter the facility and are stored in the warehouse, after which they are picked from stock and issued to a specific job. If spoilage or scrap is created, then normal amounts are charged to an overhead cost pool for later allocation, while abnormal amounts are charged directly to the cost of goods sold. Once work is completed on a job, the cost of the entire job is shifted from work-in-process inventory to finished goods inventory. Then, once the goods are sold, the cost of the asset is removed from the inventory account and shifted into the cost of goods sold, while the company also records a sale transaction.

sale transaction

44

Job Costing Allocation of Labour
In a job costing environment, labour may be charged directly to individual jobs if the labour is directly ____________ to those jobs. All other manufacturing-related labour is recorded in an overhead cost pool and is then allocated to the various open jobs. The first type of labour is called direct labour, and the second type is known as indirect labour. When a job is completed, it is then shifted into a finished goods inventory account. Then, once the goods are sold, the cost of the asset is removed from the inventory account and shifted into the cost of goods sold, while the company also records a sale transaction.

traceable

45

Job Costing Allocation of Labour
In a job costing environment, labour may be charged directly to individual jobs if the labour is directly traceable to those jobs. All other manufacturing-related labour is recorded in an overhead cost pool and is then allocated to the various open jobs. The first type of labour is called direct labour, and the second type is known as ________labour. When a job is completed, it is then shifted into a finished goods inventory account. Then, once the goods are sold, the cost of the asset is removed from the inventory account and shifted into the cost of goods sold, while the company also records a sale transaction.

indirect

46

Job Costing Allocation of Labour
In a job costing environment, labour may be charged directly to individual jobs if the labour is directly traceable to those jobs. All other manufacturing-related labour is recorded in an overhead cost pool and is then allocated to the various open jobs. The first type of labour is called direct labour, and the second type is known as indirect labour. When a job is completed, it is then shifted into a finished goods inventory account. Then, once the goods are sold, the cost of the asset is removed from the inventory account and shifted into the cost of goods sold, while the company also records a ____________.

Sales transaction

47

In a job costing environment, non-direct costs are accumulated into one or more overhead cost pools, from which you allocate costs to ________ jobs based upon some measure of cost usage. The key issues when applying overhead are to consistently charge the same types of costs to overhead in all reporting periods and to consistently apply these costs to jobs. Otherwise, it can be extremely difficult for the cost accountant to explain why overhead cost allocations vary from one month to the next.

open

48

In a job costing environment, non-direct costs are accumulated into one or more overhead cost pools, from which you allocate costs to open jobs based upon some measure of cost usage. The key issues when applying overhead are to __________ charge the same types of costs to overhead in all reporting periods and to ____________ apply these costs to jobs. Otherwise, it can be extremely difficult for the cost accountant to explain why overhead cost allocations vary from one month to the next.

consistently

49

In a job costing environment, non-direct costs are accumulated into one or more overhead cost pools, from which you allocate costs to open jobs based upon some measure of cost usage. The key issues when applying overhead are to consistently charge the same types of costs to overhead in all reporting periods and to consistently apply these costs to jobs. Otherwise, it can be extremely difficult for the cost accountant to explain why overhead cost ______________ vary from one month to the next.

allocations

50

The accumulation of ____________costs into overhead pools and their allocation to jobs can be a time-consuming process that interferes with closing the books on a reporting period. To speed up the process, an alternative is to allocate standard costs that are based on historical costs. These standard costs will never be exactly the same as actual costs, but can be easily calculated and allocated.

actual

51

The accumulation of actual costs into overhead pools and their allocation to jobs can be a time-consuming process that interferes with closing the books on a reporting period. To speed up the process, an alternative is to allocate ______________ that are based on historical costs. These standard costs will never be exactly the same as actual costs, but can be easily calculated and allocated.

Standard costs

52

The accumulation of actual costs into overhead pools and their allocation to jobs can be a time-consuming process that interferes with closing the books on a reporting period. To speed up the process, an alternative is to allocate standard costs that are based on ______________. These standard costs will never be exactly the same as actual costs, but can be easily calculated and allocated.

historical costs

53

The accumulation of actual costs into overhead pools and their allocation to jobs can be a time-consuming process that interferes with closing the books on a reporting period. To speed up the process, an alternative is to allocate standard costs that are based on historical costs. These standard costs will never be exactly the same as actual costs, but can be easily calculated and ___________.

Allocated

54

The ______________ for standard costs is to use historical cost information to arrive at a standard rate per unit of activity, and then allocate this standard amount to jobs based on their units of activity. You then subtract the total amount allocated from the overhead cost pool (which contains actual overhead costs), and dispose of any remaining amount in the overhead cost pool. You can use any of the following methods to dispose of the remaining amount:
Charge to cost of goods sold. Charge the entire variance to the cost of goods sold. This is the simplest method.
Allocate the variance. Allocate the variance to the accounts for finished goods, work-in-process, and cost of goods sold, based on the ending balances in these accounts. This approach is slightly more time-consuming, but is the most theoretically correct method under generally accepted accounting principles.
Charge to jobs. Allocate the variance to those jobs that were open during the reporting period. This approach is the most time-consuming. It essentially reverts a company back to an actual costing system, since the results of this method will approximate those created under an actual cost allocation system.

The allocation of an overhead cost pool is by definition inherently inaccurate, since the underlying costs cannot be directly associated with a job. Consequently, it is best to use the simplest of the above methods to dispose of any residual amounts in the overhead cost pool.

overhead allocation process

55

The overhead allocation process for standard costs is to use historical cost information to arrive at a standard rate per unit of activity, and then allocate this standard amount to jobs based on their units of activity. You then subtract the total amount allocated from the overhead cost pool (which contains actual overhead costs), and dispose of any remaining amount in the overhead cost pool. You can use any of the following methods to dispose of the remaining amount:
____________________. Charge the entire variance to the cost of goods sold. This is the simplest method.
Allocate the variance. Allocate the variance to the accounts for finished goods, work-in-process, and cost of goods sold, based on the ending balances in these accounts. This approach is slightly more time-consuming, but is the most theoretically correct method under generally accepted accounting principles.
Charge to jobs. Allocate the variance to those jobs that were open during the reporting period. This approach is the most time-consuming. It essentially reverts a company back to an actual costing system, since the results of this method will approximate those created under an actual cost allocation system.

The allocation of an overhead cost pool is by definition inherently inaccurate, since the underlying costs cannot be directly associated with a job. Consequently, it is best to use the simplest of the above methods to dispose of any residual amounts in the overhead cost pool.

Charge to cost of goods sold

56

The overhead allocation process for standard costs is to use historical cost information to arrive at a standard rate per unit of activity, and then allocate this standard amount to jobs based on their units of activity. You then subtract the total amount allocated from the overhead cost pool (which contains actual overhead costs), and dispose of any remaining amount in the overhead cost pool. You can use any of the following methods to dispose of the remaining amount:
Charge to cost of goods sold. Charge the entire variance to the cost of goods sold. This is the simplest method.
____________. _____________ to the accounts for finished goods, work-in-process, and cost of goods sold, based on the ending balances in these accounts. This approach is slightly more time-consuming, but is the most theoretically correct method under generally accepted accounting principles.
Charge to jobs. Allocate the variance to those jobs that were open during the reporting period. This approach is the most time-consuming. It essentially reverts a company back to an actual costing system, since the results of this method will approximate those created under an actual cost allocation system.


The allocation of an overhead cost pool is by definition inherently inaccurate, since the underlying costs cannot be directly associated with a job. Consequently, it is best to use the simplest of the above methods to dispose of any residual amounts in the overhead cost pool.

Allocate the variance

57

The overhead allocation process for standard costs is to use historical cost information to arrive at a standard rate per unit of activity, and then allocate this standard amount to jobs based on their units of activity. You then subtract the total amount allocated from the overhead cost pool (which contains actual overhead costs), and dispose of any remaining amount in the overhead cost pool. You can use any of the following methods to dispose of the remaining amount:
Charge to cost of goods sold. Charge the entire variance to the cost of goods sold. This is the simplest method.
Allocate the variance. Allocate the variance to the accounts for finished goods, work-in-process, and cost of goods sold, based on the ending balances in these accounts. This approach is slightly more time-consuming, but is the most theoretically correct method under generally accepted accounting principles.
___________. Allocate the variance to those jobs that were open during the reporting period. This approach is the most time-consuming. It essentially reverts a company back to an actual costing system, since the results of this method will approximate those created under an actual cost allocation system.
The allocation of an overhead cost pool is by definition inherently inaccurate, since the underlying costs cannot be directly associated with a job. Consequently, it is best to use the simplest of the above methods to dispose of any residual amounts in the overhead cost pool.

Charge to jobs.

58

The overhead allocation process for standard costs is to use historical cost information to arrive at a standard rate per unit of activity, and then allocate this standard amount to jobs based on their units of activity. You then subtract the total amount allocated from the overhead cost pool (which contains actual overhead costs), and dispose of any remaining amount in the overhead cost pool. You can use any of the following methods to dispose of the remaining amount:
Charge to cost of goods sold. Charge the entire variance to the cost of goods sold. This is the simplest method.
Allocate the variance. Allocate the variance to the accounts for finished goods, work-in-process, and cost of goods sold, based on the ending balances in these accounts. This approach is slightly more time-consuming, but is the most theoretically correct method under generally accepted accounting principles.
Charge to jobs. Allocate the variance to those jobs that were open during the reporting period. This approach is the most time-consuming. It essentially reverts a company back to an actual costing system, since the results of this method will approximate those created under an actual cost allocation system.

The allocation of an overhead cost pool is by definition inherently inaccurate, since the underlying costs cannot be directly associated with a job. Consequently, it is ___________ to use the simplest of the above methods to dispose of any residual amounts in the overhead cost pool.

Best

59

Job order costing or job costing is a system for assigning manufacturing costs to an individual product or batches of products. Generally, the job order costing system is used only when the products manufactured are sufficiently different from each other. (When products are identical or nearly identical, the process costing system will likely be used.)
Since there is a significant variation in the products manufactured, the job order costing system will create a job cost record for each item, job or special order. The job cost record will report the direct materials and direct labour actually used plus the manufacturing overhead assigned to each job.
An example of an industry where job order costing is used is the building construction industry since each building is unique. The manufacturers of custom equipment or custom cabinetry are also examples of companies that will keep track of production costs by item or job.
The job cost records also serve as the subsidiary ledger or documentation for the cost of the work-in-process inventory, the finished goods inventory, and the cost of goods sold.

different

60

Job order costing or job costing is a system for assigning manufacturing costs to an individual product or batches of products. Generally, the job order costing system is used only when the products manufactured are sufficiently different from each other. (When products are identical or nearly identical, the process costing system will likely be used.)
Since there is a significant variation in the products manufactured, the job order costing system will create a job cost record for each item, job or special order. The job cost record will report the direct materials and direct labour actually used plus the manufacturing overhead assigned to each job.
An example of an industry where job order costing is used is the building construction industry since each building is unique. The manufacturers of custom equipment or custom cabinetry are also examples of companies that will keep track of production costs by item or job.
The job cost records also serve as the subsidiary ledger or documentation for the cost of the work-in-process inventory, the finished goods inventory, and the cost of goods sold.

manufacturing

61

Job order costing or job costing is a system for assigning manufacturing costs to an individual product or batches of products. Generally, the job order costing system is used only when the products manufactured are sufficiently different from each other. (When products are identical or nearly identical, the process costing system will likely be used.)
Since there is a significant variation in the products manufactured, the job order costing system will create a job cost record for each item, job or special order. The job cost record will report the direct materials and direct labour actually used plus the manufacturing overhead assigned to each job.
An example of an industry where job order costing is used is the building construction industry since each building is unique. The manufacturers of custom equipment or custom cabinetry are also examples of companies that will keep track of production costs by item or job.
The job cost records also serve as the _______________ or documentation for the cost of the work-in-process inventory, the finished goods inventory, and the cost of goods sold.

subsidiary ledger

62

Lucey (1993) defines costing methods as the methods of costing designed to suit the way goods are processed or manufactured or the way that services are provided. It therefore refers to the various methods that can be used to come out with the cost of an activity. It appears that the _______________ must suit the product or service to cost. This is the reason why we may have two broad categories of costing methods, namely:

1. Specific order costing:
This is a costing method applicable where the work consists of separate jobs or batches. The main sub-divisions of specific order costing are: job costing, contract costing and batch costing.

2. Continuous operation or process costing:
This costing method applies where the goods or service produced result from a sequence of conditions or repetitive operations or processes to which costs are charged before being averaged over the units produced during the period. Its main sub-divisions are: process costing including joint product and by-product, and service/function costing.

costing method

63

Lucey (1993) defines costing methods as the methods of costing designed to suit the way goods are processed or manufactured or the way that services are provided. It therefore refers to the various methods that can be used to come out with the cost of an activity. It appears that the costing method must suit the product or service to cost. This is the reason why we may have two broad categories of costing methods, namely:

1. ___________________:
This is a costing method applicable where the work consists of separate jobs or batches. The main sub-divisions of specific order costing are: job costing, contract costing and batch costing.

2. Continuous operation or process costing:
This costing method applies where the goods or service produced result from a sequence of conditions or repetitive operations or processes to which costs are charged before being averaged over the units produced during the period. Its main sub-divisions are: process costing including joint product and by-product, and service/function costing.

specific order costing

64

Lucey (1993) defines costing methods as the methods of costing designed to suit the way goods are processed or manufactured or the way that services are provided. It therefore refers to the various methods that can be used to come out with the cost of an activity. It appears that the costing method must suit the product or service to cost. This is the reason why we may have two broad categories of costing methods, namely:

1. Specific order costing:
This is a costing method applicable where the work consists of separate jobs or batches. The main sub-divisions of specific order costing are: job costing, contract costing and batch costing.

2. ___________________________:
This costing method applies where the goods or service produced result from a sequence of conditions or repetitive operations or processes to which costs are charged before being averaged over the units produced during the period. Its main sub-divisions are: process costing including joint product and by-product, and service/function costing.

Continuous operation or process costing

65

What is another name for process costing?

Continuous operation costing

66

a) ______________
This is a traditional method of accounting for cost. This is a method where the costs incurred are allocated, apportioned and absorbed by the cost unit, which is the object to cost.
Here the company production is divided into jobs, which may be of the same nature, but generally they are all different. The purpose here is to determine the profit made on each job, as this will be helpful for future planning.
b) Batch costing.
Being another type of specific order costing method, it is one which applies when a quantity of identical items are manufactured as a batch. It is very similar to job costing but the main feature of batch costing is that the unit cost is the ratio of the total cost of the batch to the number of units in the batch. This method is widely used in the footwear and clothing industries where similar items are manufactured.
c) Process costing.
This is a costing method, which is used when the production is essentially made of homogenous products, which are being produced on a continuous basis. It is very close to job costing in that:
· They have the same basic purposes, the determination of the unit cost.
· They use the same basic accounts
· The flow of costs through these accounts is quite the same for the two methods.

job costing

67

a) Job costing
This is a traditional method of accounting for cost. This is a method where the costs incurred are allocated, apportioned and absorbed by the cost unit, which is the object to cost.
Here the company production is divided into jobs, which may be of the same nature, but generally they are all different. The purpose here is to determine the profit made on each job, as this will be helpful for future planning.
b) __________ costing.
Being another type of specific order costing method, it is one which applies when a quantity of identical items are manufactured as a ___________. It is very similar to job costing but the main feature of ____________ costing is that the unit cost is the ratio of the total cost of the batch to the number of units in the batch. This method is widely used in the footwear and clothing industries where similar items are manufactured.
c) Process costing.
This is a costing method, which is used when the production is essentially made of homogenous products, which are being produced on a continuous basis. It is very close to job costing in that:
· They have the same basic purposes, the determination of the unit cost.
· They use the same basic accounts
· The flow of costs through these accounts is quite the same for the two methods.

batch

68

a) Job costing
This is a traditional method of accounting for cost. This is a method where the costs incurred are allocated, apportioned and absorbed by the cost unit, which is the object to cost.
Here the company production is divided into jobs, which may be of the same nature, but generally they are all different. The purpose here is to determine the profit made on each job, as this will be helpful for future planning.
b) Batch costing.
Being another type of specific order costing method, it is one which applies when a quantity of identical items are manufactured as a batch. It is very similar to job costing but the main feature of batch costing is that the unit cost is the ratio of the total cost of the batch to the number of units in the batch. This method is widely used in the ____________and clothing industries where similar items are manufactured.
c) Process costing.
This is a costing method, which is used when the production is essentially made of homogenous products, which are being produced on a continuous basis. It is very close to job costing in that:
· They have the same basic purposes, the determination of the unit cost.
· They use the same basic accounts
· The flow of costs through these accounts is quite the same for the two methods.

footwear

69

a) Job costing
This is a traditional method of accounting for cost. This is a method where the costs incurred are allocated, apportioned and absorbed by the cost unit, which is the object to cost.
Here the company production is divided into jobs, which may be of the same nature, but generally they are all different. The purpose here is to determine the profit made on each job, as this will be helpful for future planning.
b) Batch costing.
Being another type of specific order costing method, it is one which applies when a quantity of identical items are manufactured as a batch. It is very similar to job costing but the main feature of batch costing is that the unit cost is the ratio of the total cost of the batch to the number of units in the batch. This method is widely used in the footwear and ___________ industries where similar items are manufactured.
c) Process costing.
This is a costing method, which is used when the production is essentially made of homogenous products, which are being produced on a continuous basis. It is very close to job costing in that:
· They have the same basic purposes, the determination of the unit cost.
· They use the same basic accounts
· The flow of costs through these accounts is quite the same for the two methods.

clothing

70

a) Job costing
This is a traditional method of accounting for cost. This is a method where the costs incurred are allocated, apportioned and absorbed by the cost unit, which is the object to cost.
Here the company production is divided into jobs, which may be of the same nature, but generally they are all different. The purpose here is to determine the profit made on each job, as this will be helpful for future planning.
b) Batch costing.
Being another type of specific order costing method, it is one which applies when a quantity of identical items are manufactured as a batch. It is very similar to job costing but the main feature of batch costing is that the unit cost is the ratio of the total cost of the batch to the number of units in the batch. This method is widely used in the footwear and clothing industries where similar items are manufactured.
c) ___________________.
This is a costing method, which is used when the production is essentially made of homogenous products, which are being produced on a continuous basis. It is very close to job costing in that:
· They have the same basic purposes, the determination of the unit cost.
· They use the same basic accounts
· The flow of costs through these accounts is quite the same for the two methods.

process costing

71

The differences are due to two main factors:
· In process costing the flow of units is quite ___________ while job costing is concerned with separate and distinct processes.
· Under process costing there is no need to try to identify materials, labour or overhead costs with particular order since that order is only part of the many that continuously flow.

continuous

72

The differences are due to two main factors:
· In process costing the flow of units is quite continuous while job costing is concerned with ________________ processes.
· Under process costing there is no need to try to identify materials, labour or overhead costs with particular order since that order is only part of the many that continuously flow.

separate and distinct

73

The differences are due to two main factors:
· In __________the flow of units is quite continuous while job costing is concerned with separate and distinct processes.
· Under _______________ there is no need to try to identify materials, labour or overhead costs with particular order since that order is only part of the many that continuously flow.

process costing

74

Cost accountant types use these cost accounting basics to organize costs into three basic categories:
Direct material costs
Direct labour costs
Burden costs
But, don't let this confuse you. Accountants have an easier way to look at these costs. They think of each of these costs as a _________. Think of three ________s on the floor. One labelled direct material, one labelled direct labour and one labelled burden. Now let's throw our costs to make a birdhouse into the correct bucket:

bucket

75

_______ is a term in business and finance related to the grouping of assets or categories. _________s can receive risk assets such as equities, lower risk or risk-free assets such as cash and short-term securities, fixed income securities with similar maturities or swaps or derivatives with proximate maturities. In managerial accounting, cost ___________s are created to track unit-level

bucket

76

What is mental accounting?
One euro is identical to any other euro, or is it?
People often behave as if money meant to be spent one way cannot simply be repurposed according to need. For example, if a couple gets a payout for a lost package of food – and then goes for an expensive dinner. This very scenario opens a famous paper about “mental accounting”, the way people tend to separate money into separate “________” for food, shelter, transport and other expenses.

bucket

77

Mental accounting goes against the idea of fungibility, that one euro or dollar or pound is identical to another. It can explain why people might feel they can splurge in certain circumstances and not in others. This has broad implications for the way individuals budget and manage money (as well as how stores price and market products).
But I’d never spend that much on a meal
Research by Richard Thaler, co-author of behavioural economics book Nudge, suggests that because the couple in the anecdote got a $300 financial windfall in the “food” category, they felt comfortable spending it on a lavish dinner, as that is also in the "food" category. He writes: “The extravagant dinner would not have occurred had each couple received a yearly salary increase of $150, even though that could have been worth more in present value terms.”

Another example involves a couple earning 10% interest on money they have saved to buy a holiday home, but who also borrowed a smaller amount at 15% interest to buy a car. It is a “violation of fungibility (at obvious economic costs)” because they are effectively paying to borrow for the car despite having money saved for the house. Mental accounting is used widely but only about a third in an eZonomics poll knew what it was and how it related to managing money.

Use your ____________s wisely
This tendency to divide money into separate buckets has implications for individuals and their budgeting. Research summarised on the Brown University website explains how mental accounting can have big influences on household spending.
Examining petrol price rises, associate professor of economics Justine Hastings writes that people typically changed their petrol-buying habits when prices went up, rather than cutting back in a different area of spending, such as food. She says an equivalent fall in household income had a much smaller effect on petrol-buying habits – which is consistent with the mental accounting idea.
“A clear pattern emerged,” the researcher says. “People behaved as if they were much poorer, buying cheaper gasoline as if a $2 increase in gasoline prices had decreased their annual income by tens of thousands of dollars.”

bucket

78

Mental accounting can help – and hinder
In his 2011 book Thinking, Fast and Slow, psychologist Daniel Kahneman writes that mental accounting can be an easy way to control spending. Like Thaler’s couple who borrowed to buy a car (despite having the money saved for a holiday home), people can use the method to avoid spending on indulgences, such as barista-made coffee or to limit building debt on credit cards.
However, the petrol-price research suggests it might pay to revise the household budget as a whole if prices noticeably rise. Perhaps savings can be made in other areas – and money moved from one “__________” to another – to help ease the pain of price hikes.

bucket

79

When goods moved to finished goods and before sale what are the costs called?

Cost of goods manufactured

80

What is the acronym for cost of goods manufactured?

COGM

81

What are prime costs?

The costs of what we need for production

82

What are prime costs made up of?

Direct Materials and Direct Labour

83

What are Conversion Costs made up of?

Direct Labour plus overhead

84

What are product costs?

The costs associated with making the products.

85

Where are product costs on the balance sheet?

As part of finished goods / inventory

86

On a per unit basis, fixed costs ___________ and variable costs remain the same

Vary

87

What do mixed costs consist of?

Both variable and fixed costs

88

A period cost is any cost that cannot be ________ into prepaid expenses, inventory, or fixed assets. A period cost is more closely associated with the passage of time than with a transactional event. ... Instead, it is typically included within the selling and administrative expenses section of the income statement.

capitalized

89

A ___________ is any cost that cannot be capitalized into prepaid expenses, inventory, or fixed assets. A ___________ is more closely associated with the passage of time than with a transactional event. ... Instead, it is typically included within the selling and administrative expenses section of the income statement.

period cost

90

According to U.S. generally accepted accounting principles, or _________, all selling and administrative costs are treated as period costs. Common examples of period costs include marketing expenses, rent, office depreciation and indirect labour. Even if physical inventories are composed of items that are treated as product costs, the actual administration of warehouses and inventory management expenses are considered period costs.

GAAP

91

Under the high low method, how is the variable cost calculated?

(Total cost at the highest level of activity – total cost at the lowest level of activity) / (number of units / labour hour at the highest level of activity - number of units / labour hour at the lowest level of activity)

92

Under the high low method, how is fixed cost calculated?

By subtracting total variable cost from total cost

93

Under what method is variable cost calculated the following way?
(Total cost at the highest level of activity – total cost at the lowest level of activity) / (number of units / labour hour at the highest level of activity - number of units / labour hour at the lowest level of activity)

The high low method

94

Under what method is fixed cost calculated the following way?
By subtracting total variable cost from total cost

The high low method

95

How is the predetermined rate calculated for job order costing?

Estimated total manufacturing cost overhead / Estimated total amount of the allocation base

96

How is the predetermined rate different from machine overhead rate per machine hour?

It also includes a portion of the fixed cost allocated to the unit.

97

What is over applied overhead?

What is over applied overhead?
Overapplied overhead is excess amount of overhead applied during a production period over the actual overhead incurred during the period. In other words, it's the amount that the estimated overhead exceeds the actual overhead incurred for a production period.

98

What happens to over applied overhead?

It is credited against cost of goods sold.

99

How is over applied overhead treated in the balance sheet?

Excess of overhead applied to work-in-process inventory over the amount of overhead actually incurred. ... Overapplied overhead is reported on the balance sheet and is reported as unearned revenue. At the end of the year, overapplied overhead is balanced by creating a credit to Cost of Goods Sold.

100

What sort of products is process costing used for?

Products which are exactly the same eg Coca Cola bottles or tennis balls

101

What is the main difference between job order costing and process costing?

In job order costing we have different products (jobs) and in process costing we have the same product but different departments.

102

Will the problem always tell you or if you are at a job, will you always know the percentage of completion?

For example that materials are completed 90% and conversion cost 50%

Yes

103

Beginning ___________ is ignored for this method.

WIP

104

We are working on 10 units. Each unit is 30% complete. How many equivalent units do we have under weighted average cost?
a) 10 equivalent units;
b) 3 equivalent units;
c) 5 equivalent units.

3 equivalent units

105

A job cost system is one of a number of methods to determine the cost to manufacture a good (_______). Other methods include process costing and activity-based costing.

(EA Study Guide)

cost of job

106

A job cost system is one of a number of methods to determine the cost to manufacture a good (cost of job). Other methods include _________ and activity-based costing.
(EA Study Guide)

Process costing

107

A job cost system is one of a number of methods to determine the cost to manufacture a good (cost of job). Other methods include process costing and __________.
(EA Study Guide)

activity-based costing

108

A job cost system is the method used to cost a specific __________ job for a particular customer e.g. a custom-made piece of furniture. Each job (custom-made piece of furniture) has different amounts of raw material, labour and overhead in its manufacture.
(EA Study Guide)

custom-made

109

This _____________ can be used on small batches of production. A process-costing method could be used when large numbers of identical items are manufactured e.g. bottles of cola.
(EA Study Guide)

subsystem

110

This subsystem can be used on small batches of production. A process-costing method could be used when large numbers of identical items are manufactured e.g. bottles of cola.
(EA Study Guide)

process-costing

111

This subsystem can be used on small batches of production. A process-costing method could be used when large numbers of identical items are manufactured e.g. bottles of cola.
(EA Study Guide)

identical items

112

A well-designed job cost system is essential for the __________ of the business i.e. its viability. The business needs to accurately record the cost for each job to help ensure the marked-up price it is sold for covers all costs of its manufacture. The mark-up must also be enough to cover all non-manufacturing costs and to provide sufficient profit.

survival

113

A well-designed job cost system is essential for the survival of the business i.e. its _______. The business needs to accurately record the cost for each job to help ensure the marked-up price it is sold for covers all costs of its manufacture. The mark-up must also be enough to cover all non-manufacturing costs and to provide sufficient profit.

viability

114

A well-designed job cost system is essential for the survival of the business i.e. its viability. The business needs to ___________ record the cost for each job to help ensure the marked-up price it is sold for covers all costs of its manufacture. The mark-up must also be enough to cover all non-manufacturing costs and to provide sufficient profit.

accurately

115

A well-designed job cost system is essential for the survival of the business i.e. its viability. The business needs to accurately record the cost for each job to help ensure the ____________ price it is sold for covers all costs of its manufacture. The mark-up must also be enough to cover all non-manufacturing costs and to provide sufficient profit.

Marked-up

116

A well-designed job cost system is essential for the survival of the business i.e. its viability. The business needs to accurately record the cost for each job to help ensure the marked-up price it is sold for covers all costs of its manufacture. The mark-up must also be enough to cover all non-manufacturing costs and to provide sufficient profit.

Mark-up

117

A well-designed job cost system is essential for the survival of the business i.e. its viability. The business needs to accurately record the cost for each job to help ensure the marked-up price it is sold for covers all costs of its manufacture. The mark-up must also be enough to cover all non-manufacturing costs and to provide sufficient _______.

profit

118

______________s can be incurred at different times in the year. It is often uncertain when in the year a cost will happen, e.g. when repairs and maintenance on machinery will be needed. This creates the problem of when to charge customers for these costs. Some __________s are for a full year, e.g. insurance or depreciation on factory machinery, but it does not make sense to charge the entire _____________ against the jobs in the month the ____________ is incurred. The insurance is for the year so should be charged against all jobs in the year. The _____________ incurred for repairs and maintenance is likely to be the result of previous months’ manufacturing, so it should be to jobs other than in the current month.
Such ___________ costs must be charged out to customer otherwise the viability of the business is at risk. This is because the business has to pay the costs, but if the business is not charging the customers for them in the price of the job then the business might not earn enough to pay all its costs.

ESA Study guide

Factory overhead

119

Factory overheads can be incurred at different times in the year. It is often uncertain when in the year a cost will happen, e.g. when repairs and maintenance on machinery will be needed. This creates the problem of when to charge customers for these costs. Some factory overheads are for a full year, e.g. insurance or depreciation on factory machinery, but it does not make sense to charge the entire factory overhead against the jobs in the month the factory overhead is incurred. The insurance is for the year so should be charged against all jobs in the year. The factory overhead incurred for repairs and maintenance is likely to be the result of previous months’ manufacturing, so it should be to jobs other than in the current month.
Such factory overhead costs must be charged out to customer otherwise the v________ of the business is at risk. This is because the business has to pay the costs, but if the business is not charging the customers for them in the price of the job then the business might not earn enough to pay all its costs.
ESA Study guide

viability

120

Factory overheads can be incurred at different times in the year. It is often uncertain when in the year a cost will happen, e.g. when repairs and maintenance on machinery will be needed. This creates the problem of when to charge customers for these costs. Some factory overheads are for a full year, e.g. insurance or depreciation on factory machinery, but it does not make sense to charge the entire factory overhead against the jobs in the month the factory overhead is incurred. The insurance is for the year so should be charged against all jobs in the year. The factory overhead incurred for repairs and maintenance is likely to be the result of __________ months’ manufacturing, so it should be to jobs other than in the current month.
Such factory overhead costs must be charged out to customer otherwise the viability of the business is at risk. This is because the business has to pay the costs, but if the business is not charging the customers for them in the price of the job then the business might not earn enough to pay all its costs.

ESA Study guide

previous

121

To help ensure factory overhead costs are included in each job, factory overhead is ___________ to each job using a factory overhead allocation rate.
ESA Study Guide

allocated

122

To help ensure factory overhead costs are included in each job, factory overhead is allocated to each job using a factory ________ allocation rate.

ESA Study Guide

overhead

123

To help ensure factory overhead costs are included in each job, factory overhead is allocated to each job using a factory overhead ___________ rate.

allocation

124

To help ensure factory overhead costs are included in each job, factory overhead is allocated to each job using a factory overhead allocation ______.
ESA Study Guide

rate

125

To help ensure factory overhead costs are included in each job, factory overhead is allocated to each job using a factory overhead ___________.
ESA Study Guide

Allocation Rate

126

To help ensure factory overhead costs are included in each job, factory overhead is allocated to each job using a _________________________.
ESA Study Guide

factory overhead allocation rate

127

A manufacturer has a number of options for a cost driver. Any of the following could be used:
• _________________;
• Direct labour cost;
• Material hours;
• Material usage.

Direct labour hours

128

A manufacturer has a number of options for a cost driver. Any of the following could be used:
• Direct labour hours;
• _______________;
• Material hours;
• Material usage.

Direct labour cost

129

A manufacturer has a number of options for a cost driver. Any of the following could be used:
• Direct labour hours;
• Direct labour cost;
• ______________;
• Material usage.

Material hours

130

A manufacturer has a number of options for a cost driver. Any of the following could be used:
• Direct labour hours;
• Direct labour cost;
• Material hours;
• ________________.

Material usage

131

The __________ chosen for allocating factory overhead should be the activity that generates the most overhead.

cost driver

132

The cost driver chosen for _______________ should be the activity that generates the most overhead.

allocating factory overhead

133

The cost driver chosen for allocating factory overhead should be the __________ that generates the most overhead.

activity

134

The cost driver chosen for allocating factory overhead should be the activity that ___________ the most overhead.

generates

135

The cost driver chosen for allocating factory overhead should be the activity that generates the most _____________.

overhead

136

An example of determining where the appropriate cost driver is machine hours is as follows:
Maintenance cost for machinery (a _____________) with increased use of the machinery; therefore the number of hours the machine is in use (machine hours) will largely determine the maintenance cost; i.e. if the machine is idle for long periods it will not require much maintenance, but if it is used for most of the job then maintenance costs will increase.

factory overhead

137

An example of determining where the appropriate cost driver is machine hours is as follows:
Maintenance cost for machinery (a factory overhead) with increased use of the machinery; therefore the number of hours the machine is in use (____________) will largely determine the maintenance cost; i.e. if the machine is idle for long periods it will not require much maintenance, but if it is used for most of the job then maintenance costs will increase

machine hours

138

An example of determining where the appropriate cost driver is machine hours is as follows:
Maintenance cost for machinery (a factory overhead) with increased use of the machinery; therefore the number of hours the machine is in use (machine hours) will largely determine the maintenance cost; i.e. if the machine is idle for long periods it will ________ require much maintenance, but if it is used for most of the job then maintenance costs will increase.

not

139

An example of determining where the appropriate cost driver is machine hours is as follows:
Maintenance cost for machinery (a factory overhead) with increased use of the machinery; therefore the number of hours the machine is in use (machine hours) will largely determine the maintenance cost; i.e. if the machine is idle for long periods it will not require much maintenance, but if it is used for most of the job then maintenance costs will ___________.

increase

140

The factory _______________ is
Estimated factory overhead cost / estimated direct cost driver

overhead allocation rate formula

141

The factory overhead allocation rate formula is
__________ factory overhead cost / __________ direct cost driver

estimated

142

The factory overhead allocation rate formula is
Estimated ___________ / estimated direct cost driver

factory overhead cost

143

The factory overhead allocation rate formula is
Estimated factory overhead cost / estimated ____________

direct cost driver

144

What is the acronym for cost-volume profit analysis?

CVP

145

What does CVP stand for in management accounting?

Cost volume profit analysis

146

____________ is a series of equations that help a business to analyse how well the business is meeting its profit margins, or to calculate if a new product would be profitable to make.
ESA Study Guide

Cost volume profit analysis

147

Cost volume profit analysis is a series of equations that help a business to analyse how well the business is meeting its ___________, or to calculate if a new product would be profitable to make.
ESA Study Guide

Profit margins

148

Cost volume profit analysis is a series of equations that help a business to analyse how well the business is meeting its profit margins, or to calculate if a new product would be ____________ to make.
ESA Study Guide

profitable

149

_____________ is used to determine how changes in costs and volume affect a company's operating income and net income. In performing this analysis, there are several assumptions made, including:
• Sales price per unit is constant.
• Variable costs per unit are constant.
• Total fixed costs are constant.
• Everything produced is sold.
• Costs are only affected because activity changes.
• If a company sells more than one product, they are sold in the same mix.

Cost-volume-profit (CVP) analysis

150

Cost-volume-profit (CVP) analysis is used to determine how changes in ______________ affect a company's operating income and net income. In performing this analysis, there are several assumptions made, including:
• Sales price per unit is constant.
• Variable costs per unit are constant.
• Total fixed costs are constant.
• Everything produced is sold.
• Costs are only affected because activity changes.
• If a company sells more than one product, they are sold in the same mix.

costs and volume

151

Cost-volume-profit (CVP) analysis is used to determine how changes in costs and volume affect a company's ________________. In performing this analysis, there are several assumptions made, including:
• Sales price per unit is constant.
• Variable costs per unit are constant.
• Total fixed costs are constant.
• Everything produced is sold.
• Costs are only affected because activity changes.
• If a company sells more than one product, they are sold in the same mix.

operating income and net income

152

_____________ is used to determine how changes in costs and volume affect a company's operating income and net income. In performing this analysis, there are several assumptions made, including:
• Sales price per unit is constant.
• Variable costs per unit are constant.
• Total fixed costs are constant.
• Everything produced is sold.
• Costs are only affected because activity changes.
• If a company sells more than one product, they are sold in the same mix.

Cost-volume-profit (CVP) analysis

153

Cost-volume-profit (CVP) analysis is used to determine how changes in ______________ affect a company's operating income and net income. In performing this analysis, there are several assumptions made, including:
• Sales price per unit is constant.
• Variable costs per unit are constant.
• Total fixed costs are constant.
• Everything produced is sold.
• Costs are only affected because activity changes.
• If a company sells more than one product, they are sold in the same mix.

costs and volume

154


Cost-volume-profit (CVP) analysis is used to determine how changes in costs and volume affect a company's ________________. In performing this analysis, there are several assumptions made, including:
• Sales price per unit is constant.
• Variable costs per unit are constant.
• Total fixed costs are constant.
• Everything produced is sold.
• Costs are only affected because activity changes.
• If a company sells more than one product, they are sold in the same mix.

operating income and net income

155

What is _______________________?
________________ is based upon determining the breakeven point of cost and volume of goods and can be useful for managers making short-term economic decisions. Cost-volume profit analysis makes several assumptions in order to be relevant including that the sales price, fixed costs and variable cost per unit are constant. Running this analysis involves using several equations using price, cost and other variables and plotting them out on an economic graph.

Cost-Volume Profit Analysis

156


What is 'Cost-Volume Profit Analysis'
Cost-volume profit (CVP) analysis is based upon determining the __________ of cost and volume of goods and can be useful for managers making short-term economic decisions. Cost-volume profit analysis makes several assumptions in order to be relevant including that the sales price, fixed costs and variable cost per unit are constant. Running this analysis involves using several equations using price, cost and other variables and plotting them out on an economic graph.

breakeven point

157

Cost-volume profit (CVP) analysis is based upon determining the breakeven point of cost and volume of goods and can be useful for managers making _________ economic decisions. Cost-volume profit analysis makes several assumptions in order to be relevant including that the sales price, fixed costs and variable cost per unit are constant. Running this analysis involves using several equations using price, cost and other variables and plotting them out on an economic graph.

short-term

158

Cost-volume profit (CVP) analysis is based upon determining the breakeven point of cost and volume of goods and can be useful for managers making short-term economic decisions. Cost-volume profit analysis makes several assumptions in order to be relevant including that the sales price, fixed costs and variable cost per unit are __________. Running this analysis involves using several equations using price, cost and other variables and plotting them out on an economic graph.

constant

159

Cost-volume profit (CVP) analysis is based upon determining the breakeven point of cost and volume of goods and can be useful for managers making short-term economic decisions. Cost-volume profit analysis makes several assumptions in order to be relevant including that the sales price, fixed costs and variable cost per unit are constant. Running this analysis involves using several equations using price, cost and other variables and ___________ out on an economic graph.

plotting them

160

______________, in managerial economics, is a form of cost accounting. It is a simplified model, useful for elementary instruction and for short-run decisions.

Cost–volume–profit (CVP)

161

Cost–volume–profit (CVP), in managerial economics, is a form of cost accounting. It is a simplified model, useful for elementary instruction and for _______________.

short-run decisions

162

__________ employs the same basic assumptions as in breakeven analysis. The assumptions underlying CVP analysis are:
The behaviour of both costs and revenues are linear throughout the relevant range of activity. (This assumption precludes the concept of volume discounts on either purchased materials or sales.)
Costs can be classified accurately as either fixed or variable.
Changes in activity are the only factors that affect costs.
All units produced are sold (there is no ending finished goods inventory).
When a company sells more than one type of product, the product mix (the ratio of each product to total sales) will remain constant.

CVP analysis

163

CVP analysis employs the same basic assumptions as in breakeven analysis. The assumptions underlying CVP analysis are:
The behaviour of both costs and revenues are _________ throughout the relevant range of activity. (This assumption precludes the concept of volume discounts on either purchased materials or sales.)
Costs can be classified accurately as either fixed or variable.
Changes in activity are the only factors that affect costs.
All units produced are sold (there is no ending finished goods inventory).
When a company sells more than one type of product, the product mix (the ratio of each product to total sales) will remain constant.

Linear

164

__________ is a short run, marginal analysis: it assumes that unit variable costs and unit revenues are constant, which is appropriate for small deviations from current production and sales, and assumes a neat division between fixed costs and variable costs, though in the long run all costs are variable. For longer-term analysis that considers the entire life-cycle of a product, one therefore often prefers activity-based costing or throughput accounting.

CVP

165

CVP is a short run, marginal analysis: it assumes that unit variable costs and unit revenues are constant, which is appropriate for ___________ from current production and sales, and assumes a neat division between fixed costs and variable costs, though in the long run all costs are variable. For longer-term analysis that considers the entire life-cycle of a product, one therefore often prefers activity-based costing or throughput accounting

small deviations

166

CVP is a short run, marginal analysis: it assumes that unit variable costs and unit revenues are constant, which is appropriate for small deviations from current production and sales, and assumes a neat division between fixed costs and variable costs, though in the long run all costs are _________. For longer-term analysis that considers the entire life-cycle of a product, one therefore often prefers activity-based costing or throughput accounting

variable

167

CVP is a short run, marginal analysis: it assumes that unit variable costs and unit revenues are constant, which is appropriate for small deviations from current production and sales, and assumes a neat division between fixed costs and variable costs, though in the long run all costs are variable. For longer-term analysis that considers the entire ____________ of a product, one therefore often prefers activity-based costing or throughput accounting

life-cycle

168

______________is a principle-based and simplified management accounting approach that provides managers with decision support information for enterprise profitability improvement. TA is relatively new in management accounting. It is an approach that identifies factors that limit an organization from reaching its goal, and then focuses on simple measures that drive behaviour in key areas towards reaching organizational goals. TA was proposed by Eliyahu M. Goldratt[1] as an alternative to traditional cost accounting. As such, _______________ is neither cost accounting nor costing because it is cash focused and does not allocate all costs (variable and fixed expenses, including overheads) to products and services sold or provided by an enterprise. Considering the laws of variation, only costs that vary totally with units of output (see definition of T below for TVC) e.g. raw materials, are allocated to products and services which are deducted from sales to determine Throughput.[3] ______________ is a management accounting technique used as the performance measure in the Theory of Constraints (TOC).[4] It is the business intelligence used for maximizing profits, however, unlike cost accounting that primarily focuses on 'cutting costs' and reducing expenses to make a profit, _____________ primarily focuses on generating more throughput. Conceptually, ___________ seeks to increase the speed or rate at which throughput (see definition of T below) is generated by products and services with respect to an organization's constraint, whether the constraint is internal or external to the organization. ____________ is the only management accounting methodology that considers constraints as factors limiting the performance of organizations.

Throughput Accounting (TA)

169

Throughput Accounting (TA) is a principle-based and simplified management accounting approach that provides managers with decision support information for enterprise profitability improvement. TA is relatively new in management accounting. It is an approach that identifies factors that ___________an organization from reaching its goal, and then focuses on simple measures that drive behaviour in key areas towards reaching organizational goals. TA was proposed by Eliyahu M. Goldratt[1] as an alternative to traditional cost accounting. As such, Throughput Accounting[2] is neither cost accounting nor costing because it is cash focused and does not allocate all costs (variable and fixed expenses, including overheads) to products and services sold or provided by an enterprise. Considering the laws of variation, only costs that vary totally with units of output (see definition of T below for TVC) e.g. raw materials, are allocated to products and services which are deducted from sales to determine Throughput.[3] Throughput Accounting is a management accounting technique used as the performance measure in the Theory of Constraints (TOC) It is the business intelligence used for maximizing profits, however, unlike cost accounting that primarily focuses on 'cutting costs' and reducing expenses to make a profit, Throughput Accounting primarily focuses on generating more throughput. Conceptually, Throughput Accounting seeks to increase the speed or rate at which throughput (see definition of T below) is generated by products and services with respect to an organization's constraint, whether the constraint is internal or external to the organization. Throughput Accounting is the only management accounting methodology that considers constraints as factors limiting the performance of organizations.

limit

170

TA is relatively new in management accounting. It is an approach that identifies factors that limit an organization from reaching its goal, and then focuses on simple measures that drive behavior in key areas towards reaching organizational goals. TA was proposed by Eliyahu M. Goldratt[1] as an alternative to traditional cost accounting. As such, Throughput Accounting[2] is neither cost accounting nor costing because it is cash focused and does not allocate all costs (variable and fixed expenses, including overheads) to products and services sold or provided by an enterprise. Considering the laws of variation, only costs that vary totally with units of output (see definition of T below for TVC) e.g. raw materials, are allocated to products and services which are deducted from sales to determine Throughput.[3] Throughput Accounting is a management accounting technique used as the performance measure in the Theory of Constraints (TOC).[4] It is the business intelligence used for maximizing profits, however, unlike cost accounting that primarily focuses on 'c___________' and reducing expenses to make a profit, Throughput Accounting primarily focuses on generating more throughput. Conceptually, Throughput Accounting seeks to increase the speed or rate at which throughput (see definition of T below) is generated by products and services with respect to an organization's constraint, whether the constraint is internal or external to the organization. Throughput Accounting is the only management accounting methodology that considers constraints as factors limiting the performance of organizations.

cutting costs

171

Throughput Accounting (TA) is a principle-based and simplified management accounting approach that provides managers with decision support information for enterprise profitability improvement. TA is relatively new in management accounting. It is an approach that identifies factors that limit an organization from reaching its goal, and then focuses on simple measures that drive behavior in key areas towards reaching organizational goals. TA was proposed by Eliyahu M. Goldratt[1] as an alternative to traditional cost accounting. As such, Throughput Accounting[2] is neither cost accounting nor costing because it is cash focused and does not allocate all costs (variable and fixed expenses, including overheads) to products and services sold or provided by an enterprise. Considering the laws of variation, only costs that vary totally with units of output (see definition of T below for TVC) e.g. raw materials, are allocated to products and services which are deducted from sales to determine Throughput.[3] Throughput Accounting is a management accounting technique used as the performance measure in the Theory of Constraints (TOC).[4] It is the business intelligence used for maximizing profits, however, unlike cost accounting that primarily focuses on 'cutting costs' and reducing expenses to make a profit, Throughput Accounting primarily focuses on _______________. Conceptually, Throughput Accounting seeks to increase the speed or rate at which throughput (see definition of T below) is generated by products and services with respect to an organization's constraint, whether the constraint is internal or external to the organization. Throughput Accounting is the only management accounting methodology that considers constraints as factors limiting the performance of organizations.

generating more throughput

172

Under the___________ by Eliyahu M. Goldratt the solution for finance and accounting is to apply holistic thinking to the finance application. This has been termed throughput accounting.[15] Throughput accounting suggests that one examine the impact of investments and operational changes in terms of the impact on the throughput of the business. It is an alternative to cost accounting.

Theory of Constraints

173

Under the Theory of Constraints by Eliyahu M. Goldratt the solution for finance and accounting is to apply holistic thinking to the finance application. This has been termed ____________ . ___________ suggests that one examine the impact of investments and operational changes in terms of the impact on the throughput of the business. It is an alternative to cost accounting.

throughput accounting

174

Under the Theory of Constraints by Eliyahu M. Goldratt the solution for finance and accounting is to apply holistic thinking to the finance application. This has been termed throughput accounting.[15] Throughput accounting suggests that one examine the impact of investments and operational changes in terms of the impact on the throughput of the business. It is an alternative to _____________.

cost accounting

175

Under ______, the relevant range is the range of output possible, using the firm’s resources / over which costs are being measured if production is greater than this range of output then additional costs can be incurred.

CVP

176

Under CVP, the ___________ is the range of output possible, using the firm’s resources / over which costs are being measured if production is greater than this range of output then additional costs can be incurred.

relevant range

177

Under CVP, the relevant range is the range of ___________, using the firm’s resources / over which costs are being measured if production is greater than this range of output then additional costs can be incurred.

output possible

178

Under CVP, the relevant range is the range of output possible, using the firm’s resources / over which costs are being measured if production is greater than this range of output then additional _______ can be incurred.

costs

179

The ________________ is the difference between the selling price and variable costs per item (or hour of service). The margin is what remains to cover the fixed costs in order to make a profit.

contribution margin

180

The contribution margin is the difference between the _________ and variable costs per item (or hour of service). The margin is what remains to cover the fixed costs in order to make a profit.

selling price

181

The contribution margin is the difference between the selling price and _________ per item (or hour of service). The margin is what remains to cover the fixed costs in order to make a profit.

variable costs

182

The contribution ________ is the difference between the selling price and variable costs per item (or hour of service). The _________ is what remains to cover the fixed costs in order to make a profit.

margin

183

The contribution margin is the difference between the selling price and variable costs per item (or hour of service). The margin is what remains to cover the ________ in order to make a profit.

fixed costs

184

The contribution margin is the difference between the selling price and variable costs per item (or hour of service). The margin is what remains to cover the fixed costs in order to make a ______.

profit

185

Put it another way, the ______________ is the amount left from each sale after variable costs have been accounted for. The larger the ______________, the easier it is for the business to cover fixed costs and make a profit.

contribution margin

186

Put it another way, the contribution margin is the amount left from each sale after ___________ have been accounted for. The larger the contribution margin, the easier it is for the business to cover fixed costs and make a profit.

variable costs

187

Put it another way, the contribution margin is the amount left from each sale after variable costs have been accounted for. The larger the contribution margin, the easier it is for the business to cover __________ and make a profit.

fixed costs

188

Put it another way, the contribution margin is the amount left from each sale after variable costs have been accounted for. The larger the contribution margin, the easier it is for the business to cover fixed costs and make a ___________.

profit

189

_______________ = selling price – variable costs

Contribution margin

190

Contribution margin = _________________ – variable costs

selling price

191

Contribution margin = selling price – ______________

variable costs

192

___________ is the difference between the current sales volume and the break-even volume. The _____________ given the size of the decrease in sales (or production, depending on the business) before reaching break even, after which the business would start making a loss.

Margin of safety

193

Margin of safety is the difference between the current ________ volume and the break-even volume. The margin of safety given the size of the decrease in __________ (or production, depending on the business) before reaching break even, after which the business would start making a loss.

sales

194

Margin of safety is the difference between the current sales volume and the break-even volume. The margin of safety given the size of the decrease in sales (or ___________, depending on the business) before reaching break even, after which the business would start making a loss.

production

195

Margin of safety is the difference between the current sales volume and the ___________ volume. The margin of safety given the size of the decrease in sales (or production, depending on the business) before reaching ___________, after which the business would start making a loss.

break even

196

Margin of safety is the difference between the current sales volume and the break-even volume. The margin of safety given the size of the decrease in sales (or production, depending on the____________) before reaching break even, after which the ___________ would start making a loss.

business

197

What is '__________'?
__________ is a cost accounting concept that allows a company to determine the profitability of individual products. The phrase "________" can also refer to a per unit measure of a product's gross operating margin calculated simply as the product's price minus its total variable costs. This metric allows an entity to evaluate different areas of business to determine which service or product line to emphasize based on the highest margin.

Contribution Margin

198

What is 'Contribution ________'?
Contribution _________ is a cost accounting concept that allows a company to determine the profitability of individual products. The phrase "contribution _____" can also refer to a per unit measure of a product's gross operating margin calculated simply as the product's price minus its total variable costs. This metric allows an entity to evaluate different areas of business to determine which service or product line to emphasize based on the highest _________.

margin

199

What is 'Contribution Margin'?
Contribution margin is a cost accounting concept that allows a company to determine the profitability of individual products. The phrase "contribution margin" can also refer to a per unit measure of a product's gross operating margin calculated simply as the product's price minus its total variable costs. This metric allows an entity to evaluate different areas of business to determine which service or product line to emphasize based on the ________ margin.

highest

200

Usefulness of ___________
___________ is used by management when making pricing decisions. This is especially true in special pricing or special-order situations where fixed costs are sunk costs and should not be factored into the decision whether to accept or reject. Negative or low ___________s indicate a product line or business segment may not be profitable. In addition, the ___________ is helpful to analyse the impact of different levels of sales. Finally, a business can use ___________ to resolve bottlenecks. If limited resources are available, a business wants to contribute that scarce resource towards the most profitable items. Therefore, constraints are eliminated by awarding the most profitable items the resources.

Contribution Margin

201

Usefulness of Contribution Margin
Contribution margin is used by management when making pricing decisions. This is especially true in special pricing or special-order situations where fixed costs are _______ and should not be factored into the decision whether to accept or reject. Negative or low contribution margins indicate a product line or business segment may not be profitable. In addition, the contribution margin is helpful to analyse the impact of different levels of sales. Finally, a business can use contribution margin to resolve bottlenecks. If limited resources are available, a business wants to contribute that scarce resource towards the most profitable items. Therefore, constraints are eliminated by awarding the most profitable items the resources.

sunk costs

202

Contribution margin is used by management when making pricing decisions. This is especially true in special pricing or special-order situations where fixed costs are sunk costs and should not be factored into the decision whether to accept or reject. Negative or low contribution margins indicate a product line or business segment may not be profitable. In addition, the contribution margin is helpful to analyse the impact of different levels of sales. Finally, a business can use contribution margin to resolve bottlenecks. If limited resources are available, a business wants to contribute that scarce resource towards the most profitable items. Therefore, constraints are eliminated by awarding the most ___________ items the resources.

profitable

203

Application to accounting
In accounting parlance, __________ is the difference between the expected (or actual) sales level and the breakeven sales level. It can be expressed in the equation form as follows:
__________ = Expected (or) Actual Sales Level (quantity or dollar amount) - Breakeven sales Level (quantity or dollar amount)
The measure is especially useful in situations where large portions of a company's sales are at risk, such as when they are tied up in a single customer contract that may be cancelled.

margin of safety

204

Application to accounting
In accounting parlance, margin of safety is the difference between the expected (or actual) sales level and the breakeven sales level. It can be expressed in the equation form as follows:
Margin of Safety = Expected (or) Actual Sales Level (quantity or dollar amount) - Breakeven sales Level (quantity or dollar amount)
The measure is especially useful in situations where ________ portions of a company's sales are at risk, such as when they are tied up in a single customer contract that may be cancelled.

large

205


For example, Lowry Locomotion is considering the purchase of new equipment to expand the production capacity of its toy tractor product line. The addition will increase Lowry's ________by $100,000 per year, though sales will also be increased. Relevant information is noted in the following table:
The table reveals that both the margin of safety and profits worsen slightly as a result of the equipment purchase, so expanding production capacity is probably not a good idea.

operating costs

206

For example, Lowry Locomotion is considering the purchase of new equipment to expand the production capacity of its toy tractor product line. The addition will increase Lowry's operating costs by $100,000 per year, though sales will also be increased. Relevant information is noted in the following table:
The table reveals that both the _________ and profits worsen slightly as a result of the equipment purchase, so expanding production capacity is probably not a good idea.

margin of safety

207

For example, Lowry Locomotion is considering the purchase of new equipment to expand the production capacity of its toy tractor product line. The addition will increase Lowry's operating costs by $100,000 per year, though sales will also be increased. Relevant information is noted in the following table:
The table reveals that both the margin of safety and profits worsen slightly as a result of the equipment purchase, so _______________ is probably not a good idea.

expanding production capacity

208

The _________ concept does not work well when sales are strongly seasonal, since some months will yield catastrophically low results. In such cases, annualize the information in order to integrate all seasonal fluctuations into the outcome.

margin of safety

209

The margin of safety concept does not work well when sales are strongly seasonal, since some months will yield catastrophically low results. In such cases, ________ the information in order to integrate all seasonal fluctuations into the outcome.

annualise

210


The margin of safety concept does not work well when sales are strongly _________, since some months will yield catastrophically low results. In such cases, annualize the information in order to integrate all __________ fluctuations into the outcome.

seasonal

211

For example , if a shop is currently selling 10 000 units , and __________ is 6,500 units, then the margin of safety is 3,500 units.

break-even point

212

For example , if a shop is currently selling 10 000 units , and break-even point is _______ units, then the margin of safety is 3,500 units.

6,500

213

For example , if a shop is currently selling 10 000 units , and break-even point is 6,500 units, then the ____________________ is 3,500 units.

margin of safety

214

For example , if a shop is currently selling 10 000 units , and break-even point is 6,500 units, then the margin of safety is _______ units.

3,500 units

215

__________ is often expressed as a percentage of the actual volume. It shows the percentage drop in sales volume that will result in the firm being at break even.

Margin of Sales

216

Margin of Sales is often expressed as a ________ of the actual volume. It shows the _________ drop in sales volume that will result in the firm being at break even.

percentage

217

Margin of Sales is often expressed as a percentage of the actual volume. It shows the percentage drop in __________ that will result in the firm being at break even.

sales volume

218

Margin of Sales is often expressed as a percentage of the actual volume. It shows the percentage drop in sales volume that will result in the firm being at ________.

break even

219

The formula for __________ as a percentage of actual volume can be written as:-
Actual sales volume – break even volume / Actual sales volume

Margin of Safety

220

The formula for Margin of Safety as a percentage of actual volume can be written as:-
___________ – break even volume / Actual sales volume

Actual sales volume

221

The formula for Margin of Safety as a percentage of actual volume can be written as:-
Actual sales volume – ____________ / Actual sales volume

break even volume

222

The formula for Margin of Safety as a percentage of actual volume can be written as:-
Actual sales volume – break even volume / _______________

Actual sales volume

223

The formula for Margin of Safety as a percentage of actual volume can be written as:-
_____________ – break even volume / _______________

Actual sales volume

224

Note: Sometimes when calculating a ___________ or a break-even point, you may calculate a part unit e.g. 450.4. When that happens, you must round up to the next highest whole figure (e.g. 451) because a business cannot produce (or sell) part of a unit.

margin of safety

225

Note: Sometimes when calculating a margin of safety or a ___________, you may calculate a part unit e.g. 450.4. When that happens, you must round up to the next highest whole figure (e.g. 451) because a business cannot produce (or sell) part of a unit.

break-even point

226

Note: Sometimes when calculating a margin of safety or a break-even point, you may calculate a _______ unit e.g. 450.4. When that happens, you must round up to the next highest whole figure (e.g. 451) because a business cannot produce (or sell) ________ of a unit

part

227

Note: Sometimes when calculating a margin of safety or a break-even point, you may calculate a part unit e.g. 450.4. When that happens, you __________ round up to the next highest whole figure (e.g. 451) because a business cannot produce (or sell) part of a unit.

Must

228

Note: Sometimes when calculating a margin of safety or a break-even point, you may calculate a part unit e.g. 450.4. When that happens, you must round ____ to the next highest whole figure (e.g. 451) because a business cannot produce (or sell) part of a unit.

up

229

Note: Sometimes when calculating a margin of safety or a break-even point, you may calculate a part unit e.g. 450.4. When that happens, you must round up to the next _________ whole figure (e.g. 451) because a business cannot produce (or sell) part of a unit.

highest

230

__________ can also be used as a percentage of sales.
__________ * 100 / Existing Sales

Margin of Safety

231

Margin of Safety _________ also be used as a percentage of sales.
Margin of Safety * 100 / Existing Sales

can

232

Margin of Safety can also be used as a _____________.
Margin of Safety * 100 / Existing Sales

percentage of sales

233


___________ = fixed costs / contribution margin per unit
Or
FC / SP-VC

Break even units

234

Break even units = ____________/ contribution margin per unit
Or
FC / SP-VC

Fixed costs

235

Break even units = fixed costs / _____________________
Or
FC / SP-VC

contribution margin per unit

236

Break even units = fixed costs / contribution margin per unit
Or
FC / __-VC

SP

237

Break even units = fixed costs / contribution margin per unit
Or
FC / SP-___

VC

238

For break-even analysis, hours can be substituted for units if the business is providing a service.

break-even analysis

239

For___________, hours can be substituted for units if the business is providing a service.

break-even analysis

240

For break-even analysis, _____ can be substituted for units if the business is providing a service.

hours

241

For break-even analysis, hours can be substituted for______ if the business is providing a service.

units

242

For break-even analysis, hours can be substituted for units if the business is providing a _________.

service

243


If __________ are $40,000, variable costs are $4 per unit and selling price is $9 per unit
Break-even units are:
40,000/5 = 8,000 units and
Break even sales are 8,000 * $9 = $72,000

fixed costs

244

If fixed costs are _______, variable costs are $4 per unit and selling price is $9 per unit
Break-even units are:
40,000/5 = 8,000 units and
Break even sales are 8,000 * $9 = $72,000

$40,000

245

If fixed costs are $40,000, _________ are $4 per unit and selling price is $9 per unit
Break-even units are:
40,000/5 = 8,000 units and
Break even sales are 8,000 * $9 = $72,000

variable costs

246

If fixed costs are $40,000, variable costs are $4 per unit and _______ is $9 per unit
Break-even units are:
40,000/5 = 8,000 units and
Break even sales are 8,000 * $9 = $72,000

selling price

247

If fixed costs are $40,000, variable costs are $4 per unit and selling price is $9 per unit
___________ are:
40,000/5 = 8,000 units and
Break even sales are 8,000 * $9 = $72,000

Break-even units

248

If fixed costs are $40,000, variable costs are $4 per unit and selling price is $9 per unit
Break-even units are:
40,000/5 = 8,000 units and
____________ are 8,000 * $9 = $72,000

Break even sales

249

The following formula can be used under break even analysis to produce a given level of profit:
___________ + profit / Contribution margin per unit
Or
FC + profit/ SP-VC

Fixed Costs

250

The following formula can be used under break even analysis to produce a given level of profit:
Fixed costs + profit / Contribution margin per unit
Or
FC + ________/ SP-VC

profit

251

The following formula can be used under break even analysis to produce a given level of profit:
Fixed costs + profit / ________________
Or
FC + profit/ SP-VC

Contribution margin per unit

252


The following formula can be used under break even analysis to produce a given level of profit:
Fixed costs + profit / Contribution margin per unit
Or
FC + profit/ ____-VC

SP

253

The following formula can be used under break even analysis to produce a given level of profit:
Fixed costs + profit / Contribution margin per unit
Or
FC + profit/ SP-___

VC

254

An example of calculating profit using the contribution margin is:-
Profit = (19,400 * $5) - $40,000 = $57,0000
Using the formula:
Profit = (__________* contribution margin per unit) – fixed costs

volume

255

An example of calculating profit using the ____________ is:-
Profit = (19,400 * $5) - $40,000 = $57,0000
Using the formula:
Profit = (volume * ______________) – fixed costs

Contribution margin per unit

256

An example of calculating profit using the contribution margin is:-
Profit = (19,400 * $5) - $40,000 = $57,0000
Using the formula:
Profit = (volume * contribution margin per unit) – _____________

Fixed costs

257

An example of calculating profit using the contribution margin is:-
_________= (19,400 * $5) - $40,000 = $57,0000
Using the formula:
___________ = ( volume* contribution margin per unit) – fixed costs

profit

258

________________= Contribution margin / Sales

Contribution Margin Ratio

259

Contribution Margin Ratio = ________________ / Sales

Contribution margin

260

Contribution Margin Ratio = Contribution margin / __________

Sales

261

The ______________ can be used if the volume of sales or the variable cost per unit is not given.

For example:

Break Even sales value = fixed costs / contribution margin ratio
Dollars to produce a given level of profit = fixed costs + profit / contribution margin ratio

contribution ratio

262

The contribution ratio can be used if the _____________ or the variable cost per unit is not given.

For example:

Break Even sales value = fixed costs / contribution margin ratio
Dollars to produce a given level of profit = fixed costs + profit / contribution margin ratio

volume of sales

263

The contribution ratio can be used if the volume of sales or the _____________ is not given.

For example:

Break Even sales value = fixed costs / contribution margin ratio
Dollars to produce a given level of profit = fixed costs + profit / contribution margin ratio

variable cost per unit

264

The contribution ratio can be used if the volume of sales or the variable cost per unit is not given.

For example:

_______________ = fixed costs / contribution margin ratio
Dollars to produce a given level of profit = fixed costs + profit / contribution margin ratio

Break Even sales value

265

The contribution ratio can be used if the volume of sales or the variable cost per unit is not given.

For example:

Break Even sales value = ______________ / contribution margin ratio
Dollars to produce a given level of profit = fixed costs + profit / contribution margin ratio

fixed costs

266

The contribution ratio can be used if the volume of sales or the variable cost per unit is not given.

For example:

Break Even sales value = fixed costs / _______________
Dollars to produce a given level of profit = fixed costs + profit / contribution margin ratio

contribution margin ratio

267


The contribution ratio can be used if the volume of sales or the variable cost per unit is not given.

For example:

Break Even sales value = fixed costs / contribution margin ratio
____________________= fixed costs + profit / contribution margin ratio

Dollars to produce a given level of profit

268

The contribution ratio can be used if the volume of sales or the variable cost per unit is not given.

For example:

Break Even sales value = fixed costs / contribution margin ratio
Dollars to produce a given level of profit = __________ + profit / contribution margin ratio

Fixed costs

269

The contribution ratio can be used if the volume of sales or the variable cost per unit is not given.

For example:

Break Even sales value = fixed costs / contribution margin ratio
Dollars to produce a given level of profit = fixed costs + ___________ / contribution margin ratio

profit

270

The contribution ratio can be used if the volume of sales or the variable cost per unit is not given.

For example:

Break Even sales value = fixed costs / contribution margin ratio
Dollars to produce a given level of profit = fixed costs + profit / _____________________

contribution margin ratio

271

________________ give an overview of how profit is calculated. For the examination, you are usually given some information in the resource material and you need to calculate the figures. If you are not given a quantity of units, then you should use the relevant range.

Cost volume profit statements

272

Cost volume profit statements give an _______________ of how profit is calculated. For the examination, you are usually given some information in the resource material and you need to calculate the figures. If you are not given a quantity of units, then you should use the relevant range.

overview

273

Cost volume profit statements give an overview of how ___________ is calculated. For the examination, you are usually given some information in the resource material and you need to calculate the figures. If you are not given a quantity of units, then you should use the relevant range.

profit

274

Cost volume profit statements give an overview of how profit is ___________. For the examination, you are usually given some information in the resource material and you need to calculate the figures. If you are not given a quantity of units, then you should use the relevant range.

calculated

275

Cost volume profit statements give an overview of how profit is calculated. For the _____________, you are usually given some information in the resource material and you need to calculate the figures. If you are not given a quantity of units, then you should use the relevant range.

examination

276

Cost volume profit statements give an overview of how profit is calculated. For the examination, you are usually given some ___________ in the resource material and you need to calculate the figures. If you are not given a quantity of units, then you should use the relevant range.

information

277


Cost volume profit statements give an overview of how profit is calculated. For the examination, you are usually given some information in the _____________ and you need to calculate the figures. If you are not given a quantity of units, then you should use the relevant range.

resource material

278

Cost volume profit statements give an overview of how profit is calculated. For the examination, you are usually given some information in the resource material and you need to ________________. If you are not given a quantity of units, then you should use the relevant range.

calculate the figures

279

Cost volume profit statements give an overview of how profit is calculated. For the examination, you are usually given some information in the resource material and you need to calculate the figures. If you are not given a _____________, then you should use the relevant range.

given a quantity of units

280

Cost volume profit statements give an overview of how profit is calculated. For the examination, you are usually given some information in the resource material and you need to calculate the figures. If you are __________ given a quantity of units, then you should use the relevant range.

not

281


Cost volume profit statements give an overview of how profit is calculated. For the examination, you are usually given some information in the resource material and you need to calculate the figures. If you are not given a quantity of units, then you should use the _____________.

relevant range

282

Why calculate the contribution margin?
In the __________, fixed costs are unavoidable and must be paid for, regardless of the level of output (within the relevant range). Variable costs are incurred only as production starts (you do not pay for the ingredients to bake a cake if you do not intend to bake it, but you still need to pay the rent for your shop.

short run

283


Why calculate the contribution margin?
In the short run, ____________________, regardless of the level of output (within the relevant range). Variable costs are incurred only as production starts (you do not pay for the ingredients to bake a cake if you do not intend to bake it, but you still need to pay the rent for your shop.

fixed costs are unavoidable and must be paid for

284


Why calculate the contribution margin?
In the short run, fixed costs are unavoidable and must be paid for, ___________________(within the relevant range). Variable costs are incurred only as production starts (you do not pay for the ingredients to bake a cake if you do not intend to bake it, but you still need to pay the rent for your shop.

regardless of the level of output

285

Why calculate the contribution margin?
In the short run, fixed costs are unavoidable and must be paid for, regardless of the level of output (______________). Variable costs are incurred only as production starts (you do not pay for the ingredients to bake a cake if you do not intend to bake it, but you still need to pay the rent for your shop.

within the relevant range

286

Why calculate the contribution margin?
In the short run, ____________________, regardless of the level of output (within the relevant range). Variable costs are incurred only as production starts (you do not pay for the ingredients to bake a cake if you do not intend to bake it, but you still need to pay the rent for your shop.

fixed costs are unavoidable and must be paid for

287

_________s

When calculating the validity of doing a ___________, the answer is usually positive, provided that the price being offered is greater than the variable costs, because then the price received will cover the variable costs and make some contribution to fixed costs, thus increasing profits.

Special order

288

Special Orders

When _________ the validity of doing a special order, the answer is usually positive, provided that the price being offered is greater than the variable costs, because then the price received will cover the variable costs and make some contribution to fixed costs, thus increasing profits.

Calculating

289

Special Orders

When calculating the ___________ of doing a special order, the answer is usually positive, provided that the price being offered is greater than the variable costs, because then the price received will cover the variable costs and make some contribution to fixed costs, thus increasing profits.

validity

290

Special Orders

When calculating the validity of doing a special order, the ________________, provided that the price being offered is greater than the variable costs, because then the price received will cover the variable costs and make some contribution to fixed costs, thus increasing profits.

answer is usually positive

291

Special Orders

When calculating the validity of doing a special order, the answer is usually positive, _______________ is greater than the variable costs, because then the price received will cover the variable costs and make some contribution to fixed costs, thus increasing profits.

provided that the price being offered

292

Special Orders

When calculating the validity of doing a special order, the answer is usually positive, provided that the price being offered _________________, because then the price received will cover the variable costs and make some contribution to fixed costs, thus increasing profits.

is greater than the variable costs

293

Special Orders

When calculating the validity of doing a special order, the answer is usually positive, provided that the price being offered is greater than the variable costs, because then the ________________ and make some contribution to fixed costs, thus increasing profits.

price received will cover the variable costs

294

Special Orders

When calculating the validity of doing a special order, the answer is usually positive, provided that the price being offered is greater than the variable costs, because then the price received will cover the variable costs and make _____________________, thus increasing profits.

make some contribution to fixed costs

295

Special Orders

When calculating the validity of doing a special order, the answer is usually positive, provided that the price being offered is greater than the variable costs, because then the price received will cover the variable costs and make some contribution to fixed costs, ____________________.

thus increasing profits

296

____________ provide relevant information for management decision-making because they:
• Provide timely information - making future predictions based on past experience;
• Provide predictive value - for cash flow planning;
• Provide feedback value – as we can compare against results;

Budgets

297

Budgets ___________________________ because they:
• Provide timely information- making future predictions based on past experience;
• Provide predictive value - for cash flow planning;
• Provide feedback value – as we can compare against results;

provide relevant information for management decision-making

298


Budgets provide relevant information for management decision-making because they:
• Provide ______________- making future predictions based on past experience;
• Provide predictive value - for cash flow planning;
• Provide feedback value – as we can compare against results;

timely information

299

Budgets provide relevant information for management decision-making because they:
• Provide timely information- making future predictions based on past experience;
• Provide ____________ - for cash flow planning;
• Provide feedback value. – as we can compare against results;

predictive value

300

Budgets provide relevant information for management decision-making because they:
• Provide timely information- making future predictions based on past experience;
• Provide predictive value - for cash flow planning;
• Provide ____________– as we can compare against results;

Feedback value

301

Budgets provide relevant information for management decision-making because they:
• Provide timely information- _______________________;
• Provide predictive value - for cash flow planning;
• Provide feedback value– as we can compare against results;

making future predictions based on past experience

302

Budgets provide relevant information for management decision-making because they:
• Provide timely information- making future predictions based on past experience;
• Provide predictive value - _________________________;
• Provide feedback value– as we can compare against results;

For cash flow planning

303


Budgets provide relevant information for management decision-making because they:
• Provide timely information- making future predictions based on past experience;
• Provide predictive value - for cash flow planning;
• Provide feedback value– __________________;

as we can compare against results

304

__________s are mainly used for determining future potential cash flow. A __________ helps to predict future cash incomings and outgoings. It helps to determine future cash fluctuations, helping management to determine if additional cash injections (capital or loans) are required, or if additional purchases or investments can be made. ___________s are generally prepared over a few months at a time, enabling a future bank balance to be predicted months away.

Cash budget

305

Cash budgets are mainly used for ______________. A cash budget helps to predict future cash incomings and outgoings. It helps to determine future cash fluctuations, helping management to determine if additional cash injections (capital or loans) are required, or if additional purchases or investments can be made. Cash budgets are generally prepared over a few months at a time, enabling a future bank balance to be predicted months away.

determining future potential cash flow

306


Cash budgets are mainly used for determining future potential cash flow. A cash budget helps to predict future cash incomings and outgoings. It helps to determine ______________, helping management to determine if additional cash injections (capital or loans) are required, or if additional purchases or investments can be made. Cash budgets are generally prepared over a few months at a time, enabling a future bank balance to be predicted months away.

future cash fluctuations

307

Cash budgets are mainly used for determining future potential cash flow. A cash budget helps to predict future cash incomings and outgoings. It helps to determine future cash fluctuations, helping management to determine if additional __________ (capital or loans) are required, or if additional purchases or investments can be made. Cash budgets are generally prepared over a few months at a time, enabling a future bank balance to be predicted months away.

cash injections

308

Cash budgets are mainly used for determining future potential cash flow. A cash budget helps to predict future cash incomings and outgoings. It helps to determine future cash fluctuations, helping management to determine if additional cash injections (___________) are required, or if additional purchases or investments can be made. Cash budgets are generally prepared over a few months at a time, enabling a future bank balance to be predicted months away.

capital or loans

309

Cash budgets are mainly used for determining future potential cash flow. A cash budget helps to predict future cash incomings and outgoings. It helps to determine future cash fluctuations, helping management to determine if additional cash injections (capital or loans) are required, or if additional ___________or investments can be made. Cash budgets are generally prepared over a few months at a time, enabling a future bank balance to be predicted months away.

purchases

310

Cash budgets are mainly used for determining future potential cash flow. A cash budget helps to predict future cash incomings and outgoings. It helps to determine future cash fluctuations, helping management to determine if additional cash injections (capital or loans) are required, or if additional purchases or _____________ can be made. Cash budgets are generally prepared over a few months at a time, enabling a future bank balance to be predicted months away.

investments

311

Cash budgets are mainly used for determining future potential cash flow. A cash budget helps to predict future cash incomings and outgoings. It helps to determine future cash fluctuations, helping management to determine if additional cash injections (capital or loans) are required, or if additional purchases or investments can be made. Cash budgets are generally prepared over a few months at a time, enabling a ____________ to be predicted months away.

future bank balance

312

A ______________ is essential when a business is considering making a strategic decision because these often will involve large capital expenditure. Financial institutions such as banks often demand to see a cash budget before lending any money.

cash budget

313

A cash budget is ___________ when a business is considering making a strategic decision because these often will involve large capital expenditure. Financial institutions such as banks often demand to see a cash budget before lending any money.

essential

314

A cash budget is essential when a business is considering making a ______________ because these often will involve large capital expenditure. Financial institutions such as banks often demand to see a cash budget before lending any money.

strategic decision

315

A cash budget is essential when a business is considering making a strategic decision because these often will involve ____________. Financial institutions such as banks often demand to see a cash budget before lending any money.

large capital expenditure

316

A cash budget is essential when a business is considering making a strategic decision because these often will involve large capital expenditure. Financial institutions such as banks often demand to see a cash budget before _______________ any money.

Lending

317

___________ing is an essential planning strategy. There are many forms of _____________ to choose from and your choice will vary depending on what your future commitment might be.

budget

318

Budgeting is an __________________. There are many forms of budget to choose from and your choice will vary depending on what your future commitment might be.

essential planning strategy

319

Budgeting is an essential planning strategy. There are many forms of budget to choose from and your choice will _______ depending on what your future commitment might be.

vary

320

Budgeting is an essential planning strategy. There are many forms of budget to choose from and your choice will vary depending on what your ________________ might be.

future commitment

321

__________ allow for business to plan for future income. The business can plan for seasonal fluctuations (e.g. Christmas or weather dependant activities). ___________ focus on predicting sales figures, which can assist other areas in their predictions such as production and staffing requirements. Predicted sales figures are often based on a percentage increase on previous sales and can be used as a base for staff incentives.

Sales budgets

322

Sales budgets allow for business to _____ for future income. The business can ______ for seasonal fluctuations (e.g. Christmas or weather dependant activities). Sales budgets focus on predicting sales figures, which can assist other areas in their predictions such as production and staffing requirements. Predicted sales figures are often based on a percentage increase on previous sales and can be used as a base for staff incentives.

plan

323

Sales budgets allow for business to plan for future income. The business can plan for (e.g. Christmas or weather dependant activities). Sales budgets focus on predicting sales figures, which can assist other areas in their predictions such as production and staffing requirements. Predicted sales figures are often based on a percentage increase on previous sales and can be used as a base for staff incentives.

seasonal fluctuations

324


Sales budgets allow for business to plan for future income. The business can plan for seasonal fluctuations (e.g. Christmas or weather dependant activities). Sales budgets focus on __________, which can assist other areas in their predictions such as production and staffing requirements. Predicted sales figures are often based on a percentage increase on previous sales and can be used as a base for staff incentives.

predicting sales figures

325

Sales budgets allow for business to plan for future income. The business can plan for seasonal fluctuations (e.g. Christmas or weather dependant activities). Sales budgets focus on predicting sales figures, which can assist other areas in their predictions such as production and staffing requirements. Predicted sales figures are often based on a percentage increase on previous sales and can be used as a base for staff incentives.

predictions

326

Sales budgets allow for business to plan for future income. The business can plan for seasonal fluctuations (e.g. Christmas or weather dependant activities). Sales budgets focus on predicting sales figures, which can assist other areas in their predictions such as __________ and staffing requirements. Predicted sales figures are often based on a percentage increase on previous sales and can be used as a base for staff incentives.

production

327

Sales budgets allow for business to plan for future income. The business can plan for seasonal fluctuations (e.g. Christmas or weather dependant activities). Sales budgets focus on predicting sales figures, which can assist other areas in their predictions such as production and ___________. Predicted sales figures are often based on a percentage increase on previous sales and can be used as a base for staff incentives.

Staffing requirements

328

Sales budgets allow for business to plan for future income. The business can plan for seasonal fluctuations (e.g. Christmas or weather dependant activities). Sales budgets focus on predicting sales figures, which can assist other areas in their predictions such as production and staffing requirements. ___________ are often based on a percentage increase on previous sales and can be used as a base for staff incentives.

Predicted sales figures

329

Sales budgets allow for business to plan for future income. The business can plan for seasonal fluctuations (e.g. Christmas or weather dependant activities). Sales budgets focus on predicting sales figures, which can assist other areas in their predictions such as production and staffing requirements. Predicted sales figures are often based on a percentage increase on previous sales and can be used as a base for staff incentives.

percentage increase on previous sales

330

Sales budgets allow for business to plan for future income. The business can plan for seasonal fluctuations (e.g. Christmas or weather dependant activities). Sales budgets focus on predicting sales figures, which can assist other areas in their predictions such as production and staffing requirements. Predicted sales figures are often based on a percentage increase on previous sales and can be used as a base for staff incentives.

base for staff incentives

331

__________. Manufacturing firms use __________ to predict purchases of materials and staffing requirements that will meet production targets. Businesses use ___________ to allow for areas of high demand (such as Christmas or other seasonal events). Other materials used for production may need to be sourced from overseas, so planning is crucial in order to have fully stocked inventory at the appropriate times, and to not have excess requirements when not needed (because this would mean cash was tied up in materials that were not being used.

Production Budgets

332

Production Budgets. Manufacturing firms use production budgets to _________ purchases of materials and staffing requirements that will meet production targets. Businesses use production budgets to allow for areas of high demand (such as Christmas or other seasonal events). Other materials used for production may need to be sourced from overseas, so planning is crucial in order to have fully stocked inventory at the appropriate times, and to not have excess requirements when not needed (because this would mean cash was tied up in materials that were not being used.

predict

333

Production Budgets. Manufacturing firms use production budgets to predict ________ and staffing requirements that will meet production targets. Businesses use production budgets to allow for areas of high demand (such as Christmas or other seasonal events). Other materials used for production may need to be sourced from overseas, so planning is crucial in order to have fully stocked inventory at the appropriate times, and to not have excess requirements when not needed (because this would mean cash was tied up in materials that were not being used.

purchases of materials

334

Production Budgets. Manufacturing firms use production budgets to predict purchases of materials and __________ that will meet production targets. Businesses use production budgets to allow for areas of high demand (such as Christmas or other seasonal events). Other materials used for production may need to be sourced from overseas, so planning is crucial in order to have fully stocked inventory at the appropriate times, and to not have excess requirements when not needed (because this would mean cash was tied up in materials that were not being used.

staffing requirements

335

Production Budgets. Manufacturing firms use production budgets to predict purchases of materials and staffing requirements that will meet production targets. Businesses use production budgets to allow for areas of high demand (such as Christmas or other seasonal events). Other materials used for production may need to be sourced from overseas, so planning is crucial in order to have fully stocked inventory at the appropriate times, and to not have excess requirements when not needed (because this would mean cash was tied up in materials that were not being used.

production targets

336

Production Budgets. Manufacturing firms use production budgets to predict purchases of materials and staffing requirements that will meet production targets. Businesses use production budgets to allow for __________ (such as Christmas or other seasonal events). Other materials used for production may need to be sourced from overseas, so planning is crucial in order to have fully stocked inventory at the appropriate times, and to not have excess requirements when not needed (because this would mean cash was tied up in materials that were not being used.

areas of high demand

337

Production Budgets. Manufacturing firms use production budgets to predict purchases of materials and staffing requirements that will meet production targets. Businesses use production budgets to allow for areas of high demand (such as Christmas or other seasonal events). Other materials used for production may need to be _____________, so planning is crucial in order to have fully stocked inventory at the appropriate times, and to not have excess requirements when not needed (because this would mean cash was tied up in materials that were not being used.

sourced from overseas

338

Production Budgets. Manufacturing firms use production budgets to predict purchases of materials and staffing requirements that will meet production targets. Businesses use production budgets to allow for areas of high demand (such as Christmas or other seasonal events). Other materials used for production may need to be sourced from overseas, so planning is _________ in order to have fully stocked inventory at the appropriate times, and to not have excess requirements when not needed (because this would mean cash was tied up in materials that were not being used.

crucial

339

Production Budgets. Manufacturing firms use production budgets to predict purchases of materials and staffing requirements that will meet production targets. Businesses use production budgets to allow for areas of high demand (such as Christmas or other seasonal events). Other materials used for production may need to be sourced from overseas, so planning is crucial in order to have _____________ at the appropriate times, and to not have excess requirements when not needed (because this would mean cash was tied up in materials that were not being used.

fully stocked inventory

340

Production Budgets. Manufacturing firms use production budgets to predict purchases of materials and staffing requirements that will meet production targets. Businesses use production budgets to allow for areas of high demand (such as Christmas or other seasonal events). Other materials used for production may need to be sourced from overseas, so planning is crucial in order to have fully stocked inventory at the appropriate times, and to not have excess requirements when not needed (because this would mean cash was ___________ that were not being used.

tied up in materials

341

Capital expenditure is the purchase of property, plant and equipment. Since the purchase price involved in most capital expenditure is ______, it is important to monitor these purchases. Capital expenditure budgets are often for a long period, because each purchase consumes a large amount of a business’s cash.

large

342

Capital expenditure is the purchase of property, plant and equipment. Since the purchase price involved in most capital expenditure is large, it is important to _____these purchases. Capital expenditure budgets are often for a long period, because each purchase consumes a large amount of a business’s cash.

monitor

343

Capital expenditure is the purchase of property, plant and equipment. Since the purchase price involved in most capital expenditure is large, it is important to monitor these purchases. Capital expenditure budgets are often for a ___________, because each purchase consumes a large amount of a business’s cash.

long period

344

Capital expenditure is the purchase of property, plant and equipment. Since the purchase price involved in most capital expenditure is large, it is important to monitor these purchases. Capital expenditure budgets are often for a long period, because each purchase consumes a _________ of a business’s cash.Capital expenditure is the purchase of property, plant and equipment. Since the purchase price involved in most capital expenditure is large, it is important to monitor these purchases. Capital expenditure budgets are often for a long period, because each purchase consumes a _________ of a business’s cash.

large amount

345

_____________________
Some businesses choose to prepare predictive financial statements in order to monitor the fluctuations from accounting period to accounting period. Doing so enables businesses to monitor future profit, debt or asset levels in order to make informed decisions.

Budgeted financial statements

346

Budgeted financial statements
Some businesses choose to prepare ___________ financial statements in order to monitor the fluctuations from accounting period to accounting period. Doing so enables businesses to monitor future profit, debt or asset levels in order to make informed decisions.

predictive

347

Budgeted financial statements
Some businesses choose to prepare predictive financial statements in order to ___________ the fluctuations from accounting period to accounting period. Doing so enables businesses to _________ future profit, debt or asset levels in order to make informed decisions.

monitor

348

Budgeted financial statements
Some businesses choose to prepare predictive financial statements in order to monitor the ___________ from accounting period to accounting period. Doing so enables businesses to monitor future profit, debt or asset levels in order to make informed decisions.

Fluctuations

349

Budgeted financial statements
Some businesses choose to prepare predictive financial statements in order to monitor the fluctuations from ____________ to ____________. Doing so enables businesses to monitor future profit, debt or asset levels in order to make informed decisions.

accounting period

350

Budgeted financial statements
Some businesses choose to prepare predictive financial statements in order to monitor the fluctuations from accounting period to accounting period. Doing so enables businesses to monitor future profit, debt or asset levels in order to make _____________.

informed decisions

351

There are ____ categories of decisions: routine decisions and strategic decisions.

two

352

There are two _____________: routine decisions and strategic decisions.

categories of decisions

353

There are two categories of decisions: ______________ and strategic decisions.

routine decisions

354

There are two categories of decisions: routine decisions and ________________.

strategic decisions

355

_______________ concern the daily running of the business. Usually a routine decision affects only one accounting period and involves only revenue expenditure.

Routine decisions

356

Routine decisions concern the ________________. Usually a routine decision affects only one accounting period and involves only revenue expenditure.

daily running of the business

357

Routine decisions concern the daily running of the business. Usually a routine decision affects only __________________ and involves only revenue expenditure.

one accounting period

358

Routine decisions concern the daily running of the business. Usually a routine decision affects only one accounting period and involves only ______________.

revenue expenditure

359

___________ relate to the long term running of the business and affect the next accounting period; there is usually a one-off decision made by senior management. ____________ tend to relate specifically to the long-term goals and objectives of the business. ______________ often involve capital expenditure.

Strategic decisions

360

Strategic decisions relate to the ____________ of the business and affect the next accounting period; there is usually a one-off decision made by senior management. Strategic decisions tend to relate specifically to the long-term goals and objectives of the business. Strategic decisions often involve capital expenditure.

long term running

361

Strategic decisions relate to the long term running of the business and affect the ____________; there is usually a one-off decision made by senior management. Strategic decisions tend to relate specifically to the long-term goals and objectives of the business. Strategic decisions often involve capital expenditure.

next accounting period

362

Strategic decisions relate to the long term running of the business and affect the next accounting period; there is usually a ___________ made by senior management. Strategic decisions tend to relate specifically to the long-term goals and objectives of the business. Strategic decisions often involve capital expenditure.

one-off decision

363

Strategic decisions relate to the long term running of the business and affect the next accounting period; there is usually a one-off decision made by senior management. Strategic decisions tend to relate specifically to the long-term goals and objectives of the business. Strategic decisions often involve capital expenditure.

senior management

364

Strategic decisions relate to the long term running of the business and affect the next accounting period; there is usually a one-off decision made by senior management. Strategic decisions tend to relate specifically to the ______________ of the business. Strategic decisions often involve capital expenditure.

long-term goals and objectives

365

Strategic decisions relate to the long term running of the business and affect the next accounting period; there is usually a one-off decision made by senior management. Strategic decisions tend to relate specifically to the long-term goals and objectives of the business. Strategic decisions often involve _________________.

capital expenditure

366

When calculating the validity of a special order, the answer is usually positive provided that the price being offered is greater than variable costs, because then the price received will cover the variable costs and make some contribution to fixed costs t_______ i_________ p___________.

Thus increasing profits

367

When calculating the validity of a special order, the answer is usually positive provided that the price being offered is greater than variable costs, because then the price received will cover the variable costs and make some contribution to fixed costs th___ incre______ prof________.

Thus increasing profits

368

When calculating the validity of a special order, the answer is usually positive provided that the price being offered is greater than variable costs, because then the price received will cover the variable costs and make some contribution to fixed costs thus increasing prof____.

Thus increasing profits

369

When calculating the validity of a special order, the answer is usually positive provided that the price being offered is greater than variable costs, because then the price received will cover the variable costs and make some contribution to fixed costs thus incre_______ profits.

Thus increasing profits

370

What is the acronym for thus increasing profits?

TIP

371

What does the acronym TIP stand for when discussing the benefits of taking on a special order where price being offered exceeds variable costs?

Thus increasing profits

372

A cash budget helps to determine f_______ c___ f___________.

future cash fluctuations

373

A cash budget helps to determine fut____ cash fluct__________.

future cash fluctuations

374

A cash budget helps to determine future cash f_______________.

future cash fluctuations

375

A cash budget helps to determine ___________ cash fluctuations.

future cash fluctuations

376

What is the acronym for future cash fluctuations?

FCP

377

What does the acronym FCF stand for with respect to what cash budgets help predict?

future cash fluctuations

378

Cash budgets are mainly used for determining f____________ p___________ c__________ f____________

future potential cash flow

379

Cash budgets are mainly used for determining fut______ pot______ ca____ fl______

future potential cash flow

380

Cash budgets are mainly used for determining f_________ p___________ cash flow

future potential cash flow

381

Cash budgets are mainly used for determining f_________ p___________ cash flow

future potential cash flow

382

Businesses base their decisions on _________ and non-financial information. When analysing a strategic decision, you should justify the reasons why the company should or should not go ahead with a decision. You should use the calculations from your earlier answers (such as the cash budgets and CVP analysis) to explain why the company should make a certain decision – or not. It is important that you use a variety of financial and non-financial reasons in your answer.

financial

383

Businesses base their decisions on financial and ___________ information. When analysing a strategic decision, you should justify the reasons why the company should or should not go ahead with a decision. You should use the calculations from your earlier answers (such as the cash budgets and CVP analysis) to explain why the company should make a certain decision – or not. It is important that you use a variety of financial and non-financial reasons in your answer.

non-financial

384

Businesses base their decisions on financial and non-financial information. When _______ a strategic decision, you should justify the reasons why the company should or should not go ahead with a decision. You should use the calculations from your earlier answers (such as the cash budgets and CVP analysis) to explain why the company should make a certain decision – or not. It is important that you use a variety of financial and non-financial reasons in your answer.

analysing

385

Businesses base their decisions on financial and non-financial information. When analysing a ___________, you should justify the reasons why the company should or should not go ahead with a decision. You should use the calculations from your earlier answers (such as the cash budgets and CVP analysis) to explain why the company should make a certain decision – or not. It is important that you use a variety of financial and non-financial reasons in your answer.

strategic decision

386

Businesses base their decisions on financial and non-financial information. When analysing a strategic decision, you should ____________ why the company should or should not go ahead with a decision. You should use the calculations from your earlier answers (such as the cash budgets and CVP analysis) to explain why the company should make a certain decision – or not. It is important that you use a variety of financial and non-financial reasons in your answer.

justify the reasons

387

Businesses base their decisions on financial and non-financial information. When analysing a strategic decision, you should justify the reasons why the company ___________ or should not go ahead with a decision. You should use the calculations from your earlier answers (such as the cash budgets and CVP analysis) to explain why the company should make a certain decision – or not. It is important that you use a variety of financial and non-financial reasons in your answer.

should

388

Businesses base their decisions on financial and non-financial information. When analysing a strategic decision, you should justify the reasons why the company should or ___________ go ahead with a decision. You should use the calculations from your earlier answers (such as the cash budgets and CVP analysis) to explain why the company should make a certain decision – or not. It is important that you use a variety of financial and non-financial reasons in your answer.

should not

389

Businesses base their decisions on financial and non-financial information. When analysing a strategic decision, you should justify the reasons why the company should or should not ______________. You should use the calculations from your earlier answers (such as the cash budgets and CVP analysis) to explain why the company should make a certain decision – or not. It is important that you use a variety of financial and non-financial reasons in your answer.

go ahead with a decision

390

Businesses base their decisions on financial and non-financial information. When analysing a strategic decision, you should justify the reasons why the company should or should not go ahead with a decision. You should use the ________________ (such as the cash budgets and CVP analysis) to explain why the company should make a certain decision – or not. It is important that you use a variety of financial and non-financial reasons in your answer.

calculations from your earlier answers

391

Businesses base their decisions on financial and non-financial information. When analysing a strategic decision, you should justify the reasons why the company should or should not go ahead with a decision. You should use the calculations from your earlier answers (such as the ___________and CVP analysis) to explain why the company should make a certain decision – or not. It is important that you use a variety of financial and non-financial reasons in your answer.

cash budgets

392

Businesses base their decisions on financial and non-financial information. When analysing a strategic decision, you should justify the reasons why the company should or should not go ahead with a decision. You should use the calculations from your earlier answers (such as the cash budgets and _____________) to explain why the company should make a certain decision – or not. It is important that you use a variety of financial and non-financial reasons in your answer.

CVP analysis

393

Businesses base their decisions on financial and non-financial information. When analysing a strategic decision, you should justify the reasons why the company should or should not go ahead with a decision. You should use the calculations from your earlier answers (such as the cash budgets and CVP analysis) ____________________ – or not. It is important that you use a variety of financial and non-financial reasons in your answer.

to explain why the company should make a certain decision

394

Businesses base their decisions on financial and non-financial information. When analysing a strategic decision, you should justify the reasons why the company should or should not go ahead with a decision. You should use the calculations from your earlier answers (such as the cash budgets and CVP analysis) to explain why the company should make a certain decision – ____________. It is important that you use a variety of financial and non-financial reasons in your answer.

or not

395

Businesses base their decisions on financial and non-financial information. When analysing a strategic decision, you should justify the reasons why the company should or should not go ahead with a decision. You should use the calculations from your earlier answers (such as the cash budgets and CVP analysis) to explain why the company should make a certain decision – or not. It is ______________ that you use a variety of financial and non-financial reasons in your answer.

important

396

Businesses base their decisions on financial and non-financial information. When analysing a strategic decision, you should justify the reasons why the company should or should not go ahead with a decision. You should use the calculations from your earlier answers (such as the cash budgets and CVP analysis) to explain why the company should make a certain decision – or not. It is important that you use a _______________________ in your answer.

variety of financial and non-financial reasons

397

Businesses base their decisions on financial and non-financial information. When analysing a strategic decision, you should justify the reasons why the company should or should not go ahead with a decision. You should use the calculations from your earlier answers (such as the cash budgets and CVP analysis) to explain why the company should make a certain decision – or not. It is important that you use a variety of financial and non-financial reasons _________________.

in your answer

398

____________ includes:-
Money related information – any figures you have calculated that have a monetary value to them, (for example predicted sales or break-even points);
The actual cost of making the product or expanding the business (to see if the budget can cover the cost);
The selling price of the new product or perhaps the predicted sales one the new ‘decision’ has been purchased / carried out;
Other new costs that might come into effect - consider the new, additional costs of marketing, raw materials, staff training and so on;
Cost of borrowing (e.g. interest costs if the business is planning to borrow money (a loan).
Note: You must use figures when dealing with financial information.

Financial information

399

Financial information includes:-
_______________ – any figures you have calculated that have a monetary value to them, (for example predicted sales or break-even points);
The actual cost of making the product or expanding the business (to see if the budget can cover the cost);
The selling price of the new product or perhaps the predicted sales one the new ‘decision’ has been purchased / carried out;
Other new costs that might come into effect - consider the new, additional costs of marketing, raw materials, staff training and so on;
Cost of borrowing (e.g. interest costs if the business is planning to borrow money (a loan).
Note: You must use figures when dealing with financial information.

Money related information

400

Financial information includes:-
Money related information – any figures you have calculated that have a monetary value to them, (for example predicted sales or break-even points);
The ______________________ (to see if the budget can cover the cost);
The selling price of the new product or perhaps the predicted sales one the new ‘decision’ has been purchased / carried out;
Other new costs that might come into effect - consider the new, additional costs of marketing, raw materials, staff training and so on;
Cost of borrowing (e.g. interest costs if the business is planning to borrow money (a loan).
Note: You must use figures when dealing with financial information.

actual cost of making the product or expanding the business

401

Financial information includes:-
Money related information – any figures you have calculated that have a monetary value to them, (for example predicted sales or break-even points);
The actual cost of making the product or expanding the business (___________________________);
The selling price of the new product or perhaps the number of predicted sales once the new ‘decision’ has been purchased / carried out;
Other new costs that might come into effect - consider the new, additional costs of marketing, raw materials, staff training and so on;
Cost of borrowing (e.g. interest costs if the business is planning to borrow money (a loan).
Note: You must use figures when dealing with financial information.

to see if the budget can cover the cost

402

Financial information includes:-
Money related information – any figures you have calculated that have a monetary value to them, (for example predicted sales or break-even points);
The actual cost of making the product or expanding the business (to see if the budget can cover the cost);
The selling price of the new product or perhaps _______________once the new ‘decision’ has been purchased / carried out;
Other new costs that might come into effect - consider the new, additional costs of marketing, raw materials, staff training and so on;
Cost of borrowing (e.g. interest costs if the business is planning to borrow money (a loan).
Note: You must use figures when dealing with financial information.

the number of predicted sales

403

Financial information includes:-
Money related information – any figures you have calculated that have a monetary value to them, (for example predicted sales or break-even points);
The actual cost of making the product or expanding the business (to see if the budget can cover the cost);
The selling price of the new product or perhaps the number of predicted sales _____________________ / carried out;
Other new costs that might come into effect - consider the new, additional costs of marketing, raw materials, staff training and so on;
Cost of borrowing (e.g. interest costs if the business is planning to borrow money (a loan).
Note: You must use figures when dealing with financial information.

once the new ‘decision’ has been purchased

404

Financial information includes:-
Money related information – any figures you have calculated that have a monetary value to them, (for example predicted sales or break-even points);
The actual cost of making the product or expanding the business (to see if the budget can cover the cost);
The selling price of the new product or perhaps the number of predicted sales once the new ‘decision’ has been purchased / ____________;
Other new costs that might come into effect - consider the new, additional costs of marketing, raw materials, staff training and so on;
Cost of borrowing (e.g. interest costs if the business is planning to borrow money (a loan).
Note: You must use figures when dealing with financial information.

carried out

405

Financial information includes:-
Money related information – any figures you have calculated that have a monetary value to them, (for example predicted sales or break-even points);
The actual cost of making the product or expanding the business (to see if the budget can cover the cost);
The selling price of the new product or perhaps the number of predicted sales once the new ‘decision’ has been purchased / carried out;
_____________________ - consider the new, additional costs of marketing, raw materials, staff training and so on;
Cost of borrowing (e.g. interest costs if the business is planning to borrow money (a loan).
Note: You must use figures when dealing with financial information.

Other new costs that might come into effect

406

Financial information includes:-
Money related information – any figures you have calculated that have a monetary value to them, (for example predicted sales or break-even points);
The actual cost of making the product or expanding the business (to see if the budget can cover the cost);
The selling price of the new product or perhaps the number of predicted sales once the new ‘decision’ has been purchased / carried out;
Other new costs that might come into effect - consider the ___________________________;
Cost of borrowing (e.g. interest costs if the business is planning to borrow money (a loan).
Note: You must use figures when dealing with financial information.

new, additional costs of marketing, raw materials, staff training and so on

407

Financial information includes:-
Money related information – any figures you have calculated that have a monetary value to them, (for example predicted sales or break-even points);
The actual cost of making the product or expanding the business (to see if the budget can cover the cost);
The selling price of the new product or perhaps the number of predicted sales once the new ‘decision’ has been purchased / carried out;
Other new costs that might come into effect - consider the new, additional costs of marketing, raw materials, staff training and so on;
________________(e.g. interest costs if the business is planning to borrow money (a loan).
Note: You must use figures when dealing with financial information.

Cost of borrowing

408

Financial information includes:-
Money related information – any figures you have calculated that have a monetary value to them, (for example predicted sales or break-even points);
The actual cost of making the product or expanding the business (to see if the budget can cover the cost);
The selling price of the new product or perhaps the number of predicted sales once the new ‘decision’ has been purchased / carried out;
Other new costs that might come into effect - consider the new, additional costs of marketing, raw materials, staff training and so on;
Cost of borrowing (e.g. interest costs if the business is planning to borrow money (a loan).
Note: _______________ when dealing with financial information.

You must use figures

409

Financial information includes:-
Money related information – any figures you have calculated that have a monetary value to them, (for example predicted sales or break-even points);
The actual cost of making the product or expanding the business (to see if the budget can cover the cost);
The selling price of the new product or perhaps the number of predicted sales once the new ‘decision’ has been purchased / carried out;
Other new costs that might come into effect - consider the new, additional costs of marketing, raw materials, staff training and so on;
Cost of borrowing (e.g. interest costs if the business is planning to borrow money (a loan).
Note: You must use figures ___________________________.

when dealing with financial information

410

Non-financial information would require ___________ of any of the following:
• What alternatives are available? Are there any competitors in the market already offering the same product or service as your business?
• How easy is it to obtain the resources that you require? Wil additional materials or labour be easy to source?
• Consider the opinions of the people who form your market. Do they require additional products or services? Perhaps the product might have an impact on the current situation or environment. Staff may require additional training with the new equipment or perhaps new staff must be hired, in which case they must learn the values of your business;
• Perhaps new structures or systems must be e put in place requiring new scheduling or timetables in a workplace. Existing staff might not like these changes;
• How realistic is your new goal – will your business b able to deliver your product or service within realistic time?
• Will the quality of your product improve o will it stay the same (will you be able to offer more of it, or offer it in a different location?);
• Will the quality of your product improve, or will it stay the same (ill you be able to offer more of it or offer it in a different location?);
• Consider the existing market demand for the product or service – does the current market need more of your product or service?

consideration

411

Non-financial information would require consideration of any of the following:
• ____________________? Are there any competitors in the market already offering the same product or service as your business?
• How easy is it to obtain the resources that you require? Wil additional materials or labour be easy to source?
• Consider the opinions of the people who form your market. Do they require additional products or services? Perhaps the product might have an impact on the current situation or environment. Staff may require additional training with the new equipment or perhaps new staff must be hired, in which case they must learn the values of your business;
• Perhaps new structures or systems must be e put in place requiring new scheduling or timetables in a workplace. Existing staff might not like these changes;
• How realistic is your new goal – will your business b able to deliver your product or service within realistic time?
• Will the quality of your product improve o will it stay the same (will you be able to offer more of it, or offer it in a different location?);
• Will the quality of your product improve, or will it stay the same (ill you be able to offer more of it or offer it in a different location?);
• Consider the existing market demand for the product or service – does the current market need more of your product or service?

What alternatives are available

412

Non-financial information would require consideration of any of the following:
• What alternatives are available? Are there any _________________ already offering the same product or service as your business?
• How easy is it to obtain the resources that you require? Wil additional materials or labour be easy to source?
• Consider the opinions of the people who form your market. Do they require additional products or services? Perhaps the product might have an impact on the current situation or environment. Staff may require additional training with the new equipment or perhaps new staff must be hired, in which case they must learn the values of your business;
• Perhaps new structures or systems must be e put in place requiring new scheduling or timetables in a workplace. Existing staff might not like these changes;
• How realistic is your new goal – will your business b able to deliver your product or service within realistic time?
• Will the quality of your product improve o will it stay the same (will you be able to offer more of it, or offer it in a different location?);
• Will the quality of your product improve, or will it stay the same (ill you be able to offer more of it or offer it in a different location?);
• Consider the existing market demand for the product or service – does the current market need more of your product or service?

any competitors in the market

413

Non-financial information would require consideration of any of the following:
• What alternatives are available? Are there any competitors in the market already ___________________ as your business?
• How easy is it to obtain the resources that you require? Wil additional materials or labour be easy to source?
• Consider the opinions of the people who form your market. Do they require additional products or services? Perhaps the product might have an impact on the current situation or environment. Staff may require additional training with the new equipment or perhaps new staff must be hired, in which case they must learn the values of your business;
• Perhaps new structures or systems must be e put in place requiring new scheduling or timetables in a workplace. Existing staff might not like these changes;
• How realistic is your new goal – will your business b able to deliver your product or service within realistic time?
• Will the quality of your product improve o will it stay the same (will you be able to offer more of it, or offer it in a different location?);
• Will the quality of your product improve, or will it stay the same (ill you be able to offer more of it or offer it in a different location?);
• Consider the existing market demand for the product or service – does the current market need more of your product or service?

offering the same product or service

414

Non-financial information would require consideration of any of the following:
• What alternatives are available? Are there any competitors in the market already offering the same product or service as your business?
• How easy is it to _______________ that you require? Wil additional materials or labour be easy to source?
• Consider the opinions of the people who form your market. Do they require additional products or services? Perhaps the product might have an impact on the current situation or environment. Staff may require additional training with the new equipment or perhaps new staff must be hired, in which case they must learn the values of your business;
• Perhaps new structures or systems must be e put in place requiring new scheduling or timetables in a workplace. Existing staff might not like these changes;
• How realistic is your new goal – will your business b able to deliver your product or service within realistic time?
• Will the quality of your product improve o will it stay the same (will you be able to offer more of it, or offer it in a different location?);
• Will the quality of your product improve, or will it stay the same (ill you be able to offer more of it or offer it in a different location?);
• Consider the existing market demand for the product or service – does the current market need more of your product or service?

obtain the resources

415

Non-financial information would require consideration of any of the following:
• What alternatives are available? Are there any competitors in the market already offering the same product or service as your business?
• How easy is it to obtain the resources that you require? Wil ___________ be easy to source?
• Consider the opinions of the people who form your market. Do they require additional products or services? Perhaps the product might have an impact on the current situation or environment. Staff may require additional training with the new equipment or perhaps new staff must be hired, in which case they must learn the values of your business;
• Perhaps new structures or systems must be e put in place requiring new scheduling or timetables in a workplace. Existing staff might not like these changes;
• How realistic is your new goal – will your business b able to deliver your product or service within realistic time?
• Will the quality of your product improve o will it stay the same (will you be able to offer more of it, or offer it in a different location?);
• Will the quality of your product improve, or will it stay the same (ill you be able to offer more of it or offer it in a different location?);
• Consider the existing market demand for the product or service – does the current market need more of your product or service?

additional materials or labour

416

Non-financial information would require consideration of any of the following:
• What alternatives are available? Are there any competitors in the market already offering the same product or service as your business?
• How easy is it to obtain the resources that you require? Wil additional materials or labour be _____________?
• Consider the opinions of the people who form your market. Do they require additional products or services? Perhaps the product might have an impact on the current situation or environment. Staff may require additional training with the new equipment or perhaps new staff must be hired, in which case they must learn the values of your business;
• Perhaps new structures or systems must be e put in place requiring new scheduling or timetables in a workplace. Existing staff might not like these changes;
• How realistic is your new goal – will your business b able to deliver your product or service within realistic time?
• Will the quality of your product improve o will it stay the same (will you be able to offer more of it, or offer it in a different location?);
• Will the quality of your product improve, or will it stay the same (ill you be able to offer more of it or offer it in a different location?);
• Consider the existing market demand for the product or service – does the current market need more of your product or service?

easy to source

417

Non-financial information would require consideration of any of the following:
• What alternatives are available? Are there any competitors in the market already offering the same product or service as your business?
• How easy is it to obtain the resources that you require? Wil additional materials or labour be easy to source?
• Consider the _______________. Do they require additional products or services? Perhaps the product might have an impact on the current situation or environment. Staff may require additional training with the new equipment or perhaps new staff must be hired, in which case they must learn the values of your business;
• Perhaps new structures or systems must be e put in place requiring new scheduling or timetables in a workplace. Existing staff might not like these changes;
• How realistic is your new goal – will your business b able to deliver your product or service within realistic time?
• Will the quality of your product improve o will it stay the same (will you be able to offer more of it, or offer it in a different location?);
• Will the quality of your product improve, or will it stay the same (ill you be able to offer more of it or offer it in a different location?);
• Consider the existing market demand for the product or service – does the current market need more of your product or service?

opinions of the people who form your market

418

Non-financial information would require consideration of any of the following:
• What alternatives are available? Are there any competitors in the market already offering the same product or service as your business?
• How easy is it to obtain the resources that you require? Wil additional materials or labour be easy to source?
• Consider the opinions of the people who form your market. Do they require ______________? Perhaps the product might have an impact on the current situation or environment. Staff may require additional training with the new equipment or perhaps new staff must be hired, in which case they must learn the values of your business;
• Perhaps new structures or systems must be e put in place requiring new scheduling or timetables in a workplace. Existing staff might not like these changes;
• How realistic is your new goal – will your business b able to deliver your product or service within realistic time?
• Will the quality of your product improve o will it stay the same (will you be able to offer more of it, or offer it in a different location?);
• Will the quality of your product improve, or will it stay the same (ill you be able to offer more of it or offer it in a different location?);
• Consider the existing market demand for the product or service – does the current market need more of your product or service?

additional products or services

419

Non-financial information would require consideration of any of the following:
• What alternatives are available? Are there any competitors in the market already offering the same product or service as your business?
• How easy is it to obtain the resources that you require? Wil additional materials or labour be easy to source?
• Consider the opinions of the people who form your market. Do they require additional products or services? Perhaps the product might have _________________ or environment. Staff may require additional training with the new equipment or perhaps new staff must be hired, in which case they must learn the values of your business;
• Perhaps new structures or systems must be e put in place requiring new scheduling or timetables in a workplace. Existing staff might not like these changes;
• How realistic is your new goal – will your business b able to deliver your product or service within realistic time?
• Will the quality of your product improve o will it stay the same (will you be able to offer more of it, or offer it in a different location?);
• Will the quality of your product improve, or will it stay the same (ill you be able to offer more of it or offer it in a different location?);
• Consider the existing market demand for the product or service – does the current market need more of your product or service?

an impact on the current situation

420

Non-financial information would require consideration of any of the following:
• What alternatives are available? Are there any competitors in the market already offering the same product or service as your business?
• How easy is it to obtain the resources that you require? Wil additional materials or labour be easy to source?
• Consider the opinions of the people who form your market. Do they require additional products or services? Perhaps the product might have an impact on the current situation _________________. Staff may require additional training with the new equipment or perhaps new staff must be hired, in which case they must learn the values of your business;
• Perhaps new structures or systems must be e put in place requiring new scheduling or timetables in a workplace. Existing staff might not like these changes;
• How realistic is your new goal – will your business b able to deliver your product or service within realistic time?
• Will the quality of your product improve o will it stay the same (will you be able to offer more of it, or offer it in a different location?);
• Will the quality of your product improve, or will it stay the same (ill you be able to offer more of it or offer it in a different location?);
• Consider the existing market demand for the product or service – does the current market need more of your product or service?

or environment

421

Non-financial information would require consideration of any of the following:
• What alternatives are available? Are there any competitors in the market already offering the same product or service as your business?
• How easy is it to obtain the resources that you require? Wil additional materials or labour be easy to source?
• Consider the opinions of the people who form your market. Do they require additional products or services? Perhaps the product might have an impact on the current situation or environment. ____________ additional training with the new equipment or perhaps new staff must be hired, in which case they must learn the values of your business;
• Perhaps new structures or systems must be e put in place requiring new scheduling or timetables in a workplace. Existing staff might not like these changes;
• How realistic is your new goal – will your business b able to deliver your product or service within realistic time?
• Will the quality of your product improve o will it stay the same (will you be able to offer more of it, or offer it in a different location?);
• Will the quality of your product improve, or will it stay the same (ill you be able to offer more of it or offer it in a different location?);
• Consider the existing market demand for the product or service – does the current market need more of your product or service?

Staff may require

422

Non-financial information would require consideration of any of the following:
• What alternatives are available? Are there any competitors in the market already offering the same product or service as your business?
• How easy is it to obtain the resources that you require? Wil additional materials or labour be easy to source?
• Consider the opinions of the people who form your market. Do they require additional products or services? Perhaps the product might have an impact on the current situation or environment. Staff may require ______________________ or perhaps new staff must be hired, in which case they must learn the values of your business;
• Perhaps new structures or systems must be e put in place requiring new scheduling or timetables in a workplace. Existing staff might not like these changes;
• How realistic is your new goal – will your business b able to deliver your product or service within realistic time?
• Will the quality of your product improve o will it stay the same (will you be able to offer more of it, or offer it in a different location?);
• Will the quality of your product improve, or will it stay the same (ill you be able to offer more of it or offer it in a different location?);
• Consider the existing market demand for the product or service – does the current market need more of your product or service?

additional training with the new equipment

423

Non-financial information would require consideration of any of the following:
• What alternatives are available? Are there any competitors in the market already offering the same product or service as your business?
• How easy is it to obtain the resources that you require? Wil additional materials or labour be easy to source?
• Consider the opinions of the people who form your market. Do they require additional products or services? Perhaps the product might have an impact on the current situation or environment. Staff may require additional training with the new equipment or perhaps ______________, in which case they must learn the values of your business;
• Perhaps new structures or systems must be e put in place requiring new scheduling or timetables in a workplace. Existing staff might not like these changes;
• How realistic is your new goal – will your business b able to deliver your product or service within realistic time?
• Will the quality of your product improve o will it stay the same (will you be able to offer more of it, or offer it in a different location?);
• Will the quality of your product improve, or will it stay the same (ill you be able to offer more of it or offer it in a different location?);
• Consider the existing market demand for the product or service – does the current market need more of your product or service?

new staff must be hired

424

Non-financial information would require consideration of any of the following:
• What alternatives are available? Are there any competitors in the market already offering the same product or service as your business?
• How easy is it to obtain the resources that you require? Wil additional materials or labour be easy to source?
• Consider the opinions of the people who form your market. Do they require additional products or services? Perhaps the product might have an impact on the current situation or environment. Staff may require additional training with the new equipment or perhaps new staff must be hired, in which case they must _____________________;
• Perhaps new structures or systems must be put in place requiring new scheduling or timetables in a workplace. Existing staff might not like these changes;
• How realistic is your new goal – will your business b able to deliver your product or service within realistic time?
• Will the quality of your product improve o will it stay the same (will you be able to offer more of it, or offer it in a different location?);
• Will the quality of your product improve, or will it stay the same (ill you be able to offer more of it or offer it in a different location?);
• Consider the existing market demand for the product or service – does the current market need more of your product or service?

learn the values of your business

425

Non-financial information would require consideration of any of the following:
• What alternatives are available? Are there any competitors in the market already offering the same product or service as your business?
• How easy is it to obtain the resources that you require? Wil additional materials or labour be easy to source?
• Consider the opinions of the people who form your market. Do they require additional products or services? Perhaps the product might have an impact on the current situation or environment. Staff may require additional training with the new equipment or perhaps new staff must be hired, in which case they must learn the values of your business;
• Perhaps new __________________ requiring new scheduling or timetables in a workplace. Existing staff might not like these changes;
• How realistic is your new goal – will your business b able to deliver your product or service within realistic time?
• Will the quality of your product improve o will it stay the same (will you be able to offer more of it, or offer it in a different location?);
• Will the quality of your product improve, or will it stay the same (ill you be able to offer more of it or offer it in a different location?);
• Consider the existing market demand for the product or service – does the current market need more of your product or service?

structures or systems must be put in place

426

Non-financial information would require consideration of any of the following:
• What alternatives are available? Are there any competitors in the market already offering the same product or service as your business?
• How easy is it to obtain the resources that you require? Wil additional materials or labour be easy to source?
• Consider the opinions of the people who form your market. Do they require additional products or services? Perhaps the product might have an impact on the current situation or environment. Staff may require additional training with the new equipment or perhaps new staff must be hired, in which case they must learn the values of your business;
• Perhaps new structures or systems must be e put in place __________________. Existing staff might not like these changes;
• How realistic is your new goal – will your business b able to deliver your product or service within realistic time?
• Will the quality of your product improve o will it stay the same (will you be able to offer more of it, or offer it in a different location?);
• Will the quality of your product improve, or will it stay the same (ill you be able to offer more of it or offer it in a different location?);
• Consider the existing market demand for the product or service – does the current market need more of your product or service?

requiring new scheduling or timetables in a workplace

427

Non-financial information would require consideration of any of the following:
• What alternatives are available? Are there any competitors in the market already offering the same product or service as your business?
• How easy is it to obtain the resources that you require? Wil additional materials or labour be easy to source?
• Consider the opinions of the people who form your market. Do they require additional products or services? Perhaps the product might have an impact on the current situation or environment. Staff may require additional training with the new equipment or perhaps new staff must be hired, in which case they must learn the values of your business;
• Perhaps new structures or systems must be e put in place requiring new scheduling or timetables in a workplace. ____________________________;
• How realistic is your new goal – will your business b able to deliver your product or service within realistic time?
• Will the quality of your product improve o will it stay the same (will you be able to offer more of it, or offer it in a different location?);
• Will the quality of your product improve, or will it stay the same (ill you be able to offer more of it or offer it in a different location?);
• Consider the existing market demand for the product or service – does the current market need more of your product or service?

Existing staff might not like these changes

428

Non-financial information would require consideration of any of the following:
• What alternatives are available? Are there any competitors in the market already offering the same product or service as your business?
• How easy is it to obtain the resources that you require? Wil additional materials or labour be easy to source?
• Consider the opinions of the people who form your market. Do they require additional products or services? Perhaps the product might have an impact on the current situation or environment. Staff may require additional training with the new equipment or perhaps new staff must be hired, in which case they must learn the values of your business;
• Perhaps new structures or systems must be put in place requiring new scheduling or timetables in a workplace. Existing staff might not like these changes;
• ____________________ – will your business b able to deliver your product or service within realistic time?
• Will the quality of your product improve o will it stay the same (will you be able to offer more of it, or offer it in a different location?);
• Will the quality of your product improve, or will it stay the same (ill you be able to offer more of it or offer it in a different location?);
• Consider the existing market demand for the product or service – does the current market need more of your product or service?

How realistic is your new goal?

429

Non-financial information would require consideration of any of the following:
• What alternatives are available? Are there any competitors in the market already offering the same product or service as your business?
• How easy is it to obtain the resources that you require? Wil additional materials or labour be easy to source?
• Consider the opinions of the people who form your market. Do they require additional products or services? Perhaps the product might have an impact on the current situation or environment. Staff may require additional training with the new equipment or perhaps new staff must be hired, in which case they must learn the values of your business;
• Perhaps new structures or systems must be put in place requiring new scheduling or timetables in a workplace. Existing staff might not like these changes;
• How realistic is your new goal – ______________________________?
• Will the quality of your product improve or will it stay the same (will you be able to offer more of it, or offer it in a different location?);
• Will the quality of your product improve, or will it stay the same (ill you be able to offer more of it or offer it in a different location?);
• Consider the existing market demand for the product or service – does the current market need more of your product or service?

will your business be able to deliver your product or service within realistic time?

430

Non-financial information would require consideration of any of the following:
• What alternatives are available? Are there any competitors in the market already offering the same product or service as your business?
• How easy is it to obtain the resources that you require? Wil additional materials or labour be easy to source?
• Consider the opinions of the people who form your market. Do they require additional products or services? Perhaps the product might have an impact on the current situation or environment. Staff may require additional training with the new equipment or perhaps new staff must be hired, in which case they must learn the values of your business;
• Perhaps new structures or systems must be put in place requiring new scheduling or timetables in a workplace. Existing staff might not like these changes;
• How realistic is your new goal – will your business b able to deliver your product or service within realistic time?
• Will the ____________________ or will it stay the same (will you be able to offer more of it, or offer it in a different location?);
• Will the quality of your product improve, or will it stay the same (ill you be able to offer more of it or offer it in a different location?);
• Consider the existing market demand for the product or service – does the current market need more of your product or service?

quality of your product improve

431

Non-financial information would require consideration of any of the following:
• What alternatives are available? Are there any competitors in the market already offering the same product or service as your business?
• How easy is it to obtain the resources that you require? Wil additional materials or labour be easy to source?
• Consider the opinions of the people who form your market. Do they require additional products or services? Perhaps the product might have an impact on the current situation or environment. Staff may require additional training with the new equipment or perhaps new staff must be hired, in which case they must learn the values of your business;
• Perhaps new structures or systems must be put in place requiring new scheduling or timetables in a workplace. Existing staff might not like these changes;
• How realistic is your new goal – will your business b able to deliver your product or service within realistic time?
• Will the quality of your product improve o will it stay the same (will you be able to offer more of it, or offer it in a different location?);
• Will the quality of your product improve, or ____________________ (will you be able to offer more of it or offer it in a different location?);
• Consider the existing market demand for the product or service – does the current market need more of your product or service?

or will it stay the same

432

Non-financial information would require consideration of any of the following:
• What alternatives are available? Are there any competitors in the market already offering the same product or service as your business?
• How easy is it to obtain the resources that you require? Wil additional materials or labour be easy to source?
• Consider the opinions of the people who form your market. Do they require additional products or services? Perhaps the product might have an impact on the current situation or environment. Staff may require additional training with the new equipment or perhaps new staff must be hired, in which case they must learn the values of your business;
• Perhaps new structures or systems must be put in place requiring new scheduling or timetables in a workplace. Existing staff might not like these changes;
• How realistic is your new goal – will your business be able to deliver your product or service within realistic time?
• Will the quality of your product improve o will it stay the same (____________________, or offer it in a different location?);
• Will the quality of your product improve, or will it stay the same (ill you be able to offer more of it or offer it in a different location?);
• Consider the existing market demand for the product or service – does the current market need more of your product or service?

will you be able to offer more of it

433

Non-financial information would require consideration of any of the following:
• What alternatives are available? Are there any competitors in the market already offering the same product or service as your business?
• How easy is it to obtain the resources that you require? Wil additional materials or labour be easy to source?
• Consider the opinions of the people who form your market. Do they require additional products or services? Perhaps the product might have an impact on the current situation or environment. Staff may require additional training with the new equipment or perhaps new staff must be hired, in which case they must learn the values of your business;
• Perhaps new structures or systems must be put in place requiring new scheduling or timetables in a workplace. Existing staff might not like these changes;
• How realistic is your new goal – will your business b able to deliver your product or service within realistic time?
• Will the quality of your product improve, or will it stay the same (will you be able to offer more of it, or offer it in a different location?);
• Will the quality of your product improve, or will it stay the same (will you be able to offer more of it or offer it in a different location?);
• Consider the existing market demand for the product or service – does the current market need more of your product or service?

or offer it in a different location

434

Non-financial information would require consideration of any of the following:
• What alternatives are available? Are there any competitors in the market already offering the same product or service as your business?
• How easy is it to obtain the resources that you require? Wil additional materials or labour be easy to source?
• Consider the opinions of the people who form your market. Do they require additional products or services? Perhaps the product might have an impact on the current situation or environment. Staff may require additional training with the new equipment or perhaps new staff must be hired, in which case they must learn the values of your business;
• Perhaps new structures or systems must be put in place requiring new scheduling or timetables in a workplace. Existing staff might not like these changes;
• How realistic is your new goal – will your business b able to deliver your product or service within realistic time?
• Will the quality of your product improve o will it stay the same (will you be able to offer more of it, or offer it in a different location?);
• Will the quality of your product improve, or will it stay the same (will you be able to offer more of it or offer it in a different location?);
• __________________ for the product or service – does the current market need more of your product or service?

Consider the existing market demand

435

Non-financial information would require consideration of any of the following:
• What alternatives are available? Are there any competitors in the market already offering the same product or service as your business?
• How easy is it to obtain the resources that you require? Wil additional materials or labour be easy to source?
• Consider the opinions of the people who form your market. Do they require additional products or services? Perhaps the product might have an impact on the current situation or environment. Staff may require additional training with the new equipment or perhaps new staff must be hired, in which case they must learn the values of your business;
• Perhaps new structures or systems must be put in place requiring new scheduling or timetables in a workplace. Existing staff might not like these changes;
• How realistic is your new goal – will your business b able to deliver your product or service within realistic time?
• Will the quality of your product improve o will it stay the same (will you be able to offer more of it, or offer it in a different location?);
• Will the quality of your product improve, or will it stay the same (will you be able to offer more of it or offer it in a different location?);
• Consider the existing market demand _____________ – does the current market need more of your product or service?

for the product or service

436

Non-financial information would require consideration of any of the following:
• What alternatives are available? Are there any competitors in the market already offering the same product or service as your business?
• How easy is it to obtain the resources that you require? Wil additional materials or labour be easy to source?
• Consider the opinions of the people who form your market. Do they require additional products or services? Perhaps the product might have an impact on the current situation or environment. Staff may require additional training with the new equipment or perhaps new staff must be hired, in which case they must learn the values of your business;
• Perhaps new structures or systems must be put in place requiring new scheduling or timetables in a workplace. Existing staff might not like these changes;
• How realistic is your new goal – will your business b able to deliver your product or service within realistic time?
• Will the quality of your product improve o will it stay the same (will you be able to offer more of it, or offer it in a different location?);
• Will the quality of your product improve, or will it stay the same (ill you be able to offer more of it or offer it in a different location?);
• Consider the existing market demand for the product or service – ______________need more of your product or service?

does the current market

437

Non-financial information would require consideration of any of the following:
• What alternatives are available? Are there any competitors in the market already offering the same product or service as your business?
• How easy is it to obtain the resources that you require? Wil additional materials or labour be easy to source?
• Consider the opinions of the people who form your market. Do they require additional products or services? Perhaps the product might have an impact on the current situation or environment. Staff may require additional training with the new equipment or perhaps new staff must be hired, in which case they must learn the values of your business;
• Perhaps new structures or systems must be put in place requiring new scheduling or timetables in a workplace. Existing staff might not like these changes;
• How realistic is your new goal – will your business b able to deliver your product or service within realistic time?
• Will the quality of your product improve o will it stay the same (will you be able to offer more of it, or offer it in a different location?);
• Will the quality of your product improve, or will it stay the same (ill you be able to offer more of it or offer it in a different location?);
• Consider the existing market demand for the product or service – does the current market ________________________?

need more of your product or service

438

You should remember the following during the _________________:
• Make sure you use the name of the business;
• Link information to your decision;
• Use the context of your business in your reasons (e.g. fishing, manufacturing, etc.,);
• Explain the impact of your decision;
• Justify your decision using at least two financial and non-financial pieces of information;
• Further explain any calculation-e.g. ‘Break-even is 5,000 which is well within the capacity for the relevant range of 7,000 – which means there is significant room for growth without increasing fixed costs.’

external examinations

439

You should remember the following during the external examinations:
• Make sure you use the _______________;
• Link information to your decision;
• Use the context of your business in your reasons (e.g. fishing, manufacturing, etc.,);
• Explain the impact of your decision;
• Justify your decision using at least two financial and non-financial pieces of information;
• Further explain any calculation-e.g. ‘Break-even is 5,000 which is well within the capacity for the relevant range of 7,000 – which means there is significant room for growth without increasing fixed costs.’

name of the business

440

You should remember the following during the external examinations:
• Make sure you use the name of the business;
• ______________________;
• Use the context of your business in your reasons (e.g. fishing, manufacturing, etc.,);
• Explain the impact of your decision;
• Justify your decision using at least two financial and non-financial pieces of information;
• Further explain any calculation-e.g. ‘Break-even is 5,000 which is well within the capacity for the relevant range of 7,000 – which means there is significant room for growth without increasing fixed costs.’

Link information to your decision

441

You should remember the following during the external examinations:
• Make sure you use the name of the business;
• Link information to your decision;
• Use the _______________ in your reasons (e.g. fishing, manufacturing, etc.,);
• Explain the impact of your decision;
• Justify your decision using at least two financial and non-financial pieces of information;
• Further explain any calculation-e.g. ‘Break-even is 5,000 which is well within the capacity for the relevant range of 7,000 – which means there is significant room for growth without increasing fixed costs.’

context of your business

442

You should remember the following during the external examinations:
• Make sure you use the name of the business;
• Link information to your decision;
• Use the context of your business ____________ (e.g. fishing, manufacturing, etc.,);
• Explain the impact of your decision;
• Justify your decision using at least two financial and non-financial pieces of information;
• Further explain any calculation-e.g. ‘Break-even is 5,000 which is well within the capacity for the relevant range of 7,000 – which means there is significant room for growth without increasing fixed costs.’

in your reasons

443

You should remember the following during the external examinations:
• Make sure you use the name of the business;
• _____________________________;
• Use the context of your business in your reasons (e.g. fishing, manufacturing, etc.,);
• Explain the impact of your decision;
• Justify your decision using at least two financial and non-financial pieces of information;
• Further explain any calculation-e.g. ‘Break-even is 5,000 which is well within the capacity for the relevant range of 7,000 – which means there is significant room for growth without increasing fixed costs.’

Explain the impact of your decision

444

You should remember the following during the external examinations:
• Make sure you use the name of the business;
• Link information to your decision;
• Use the context of your business in your reasons (e.g. fishing, manufacturing, etc.,);
• Explain the impact of your decision;
• __________________ using at least two financial and non-financial pieces of information;
• Further explain any calculation-e.g. ‘Break-even is 5,000 which is well within the capacity for the relevant range of 7,000 – which means there is significant room for growth without increasing fixed costs.’

Justify your decision

445

You should remember the following during the external examinations:
• Make sure you use the name of the business;
• Link information to your decision;
• Use the context of your business in your reasons (e.g. fishing, manufacturing, etc.,);
• Explain the impact of your decision;
• Justify your decision ______________________________________;
• Further explain any calculation -e.g. ‘Break-even is 5,000 which is well within the capacity for the relevant range of 7,000 – which means there is significant room for growth without increasing fixed costs.’

decision using at least two financial and non-financial pieces of information

446

You should remember the following during the external examinations:
• Make sure you use the name of the business;
• Link information to your decision;
• Use the context of your business in your reasons (e.g. fishing, manufacturing, etc.,);
• Explain the impact of your decision;
• Justify your decision using at least two financial and non-financial pieces of information;
• ______________________-e.g. ‘Break-even is 5,000 which is well within the capacity for the relevant range of 7,000 – which means there is significant room for growth without increasing fixed costs.’

Further explain any calculation

447

You should remember the following during the external examinations:
• Make sure you use the name of the business;
• Link information to your decision;
• Use the context of your business in your reasons (e.g. fishing, manufacturing, etc.,);
• Explain the impact of your decision;
• Justify your decision using at least two financial and non-financial pieces of information;
• Further explain any calculation-e.g. ‘______________ is 5,000 which is well within the capacity for the relevant range of 7,000 – which means there is significant room for growth without increasing fixed costs.’

Break-even

448

You should remember the following during the external examinations:
• Make sure you use the name of the business;
• Link information to your decision;
• Use the context of your business in your reasons (e.g. fishing, manufacturing, etc.,);
• Explain the impact of your decision;
• Justify your decision using at least two financial and non-financial pieces of information;
• Further explain any calculation-e.g. ‘Break-even is 5,000 ______________for the relevant range of 7,000 – which means there is significant room for growth without increasing fixed costs.’

which is well within the capacity

449

You should remember the following during the external examinations:
• Make sure you use the name of the business;
• Link information to your decision;
• Use the context of your business in your reasons (e.g. fishing, manufacturing, etc.,);
• Explain the impact of your decision;
• Justify your decision using at least two financial and non-financial pieces of information;
• Further explain any calculation-e.g. ‘Break-even is 5,000 which is well within the capacity ________________ of 7,000 – which means there is significant room for growth without increasing fixed costs.’

For the relevant range

450

You should remember the following during the external examinations:
• Make sure you use the name of the business;
• Link information to your decision;
• Use the context of your business in your reasons (e.g. fishing, manufacturing, etc.,);
• Explain the impact of your decision;
• Justify your decision using at least two financial and non-financial pieces of information;
• Further explain any calculation-e.g. ‘Break-even is 5,000 which is well within the capacity for the relevant range of 7,000 – which means _______________ without increasing fixed costs.’

there is significant room for growth

451

You should remember the following during the external examinations:
• Make sure you use the name of the business;
• Link information to your decision;
• Use the context of your business in your reasons (e.g. fishing, manufacturing, etc.,);
• Explain the impact of your decision;
• Justify your decision using at least two financial and non-financial pieces of information;
• Further explain any calculation-e.g. ‘Break-even is 5,000 which is well within the capacity for the relevant range of 7,000 – which means there is significant room for growth ____________________.’

without increasing fixed costs

452

Predicted sales figures are often based on a percentage increase on previous sales and can be used a as a base for sales incentives.
Where profit = ($19,400*$5) - $40,000 = $57,000, the contribution margin per unit = $97,000.
The cost driver chosen for alloc___________ fac___________ over___________ should be the activity that generates the most overhead.

allocating factory overhead

453

The cost driver chosen for allocating ______________ should be the activity that generates the most overhead.

allocating factory overhead

454

The cost driver chosen for a___________ factory overhead should be the activity that generates the most overhead.

allocating factory overhead

455

The cost driver chosen for allocating factory ____________ should be the activity that generates the most overhead.

allocating factory overhead

456

The contribution ratio can be used if the volume of sales or the variable cost per unit is not given.

V___________ c___________ p______ u___________

457

The contribution ratio can be used if the volume of sales or the variable c_______ p______ unit is not given.

variable cost per unit

458

The contribution ratio can be used if the volume of sales or the variable _____________ unit is not given.

variable cost per unit

459

The contribution ratio can be used if the volume of sales or the variable ___________ is not given.

variable cost per unit

460

What does VCPU stand for with respect to CVP analysis?

variable cost per unit

461

Strategic decisions relate to the long-term r___________ of the business.

long-term running

462

Strategic decisions relate to the l___________-t_______ running of the business.

long-term running

463

Strategic decisions relate to the l_________-t_________ r____________ of the business.

long-term running