Cours 1-3

Question 1

Gross margin =

Answer 1

Sales price – Cost of goods sold

Question 2

Contribution margin =

Answer 2

Sales price - all variable expenses

Question 3

BEP (qty) =

Answer 3

Fixed cost/(Sales revenue per unit – Variable costs per unit)=Fixed Cost/Unit Contribution Margin

Question 4

BEP (monetary) =

Answer 4

Fixed cost/Contribution margin % where CM%=[(selling price-unit variable cost)/(selling price)]*100

Question 5

% margin of safety =

Answer 5

(expected sales - break even sales)/expected sales

Question 6

t(volume)=

Answer 6

(Fixed cost + target profit)/Unit contribution margin

Question 7

t(sales €)=

Answer 7

(Fixed cost + target profit)/Contribution margin %

Question 8

CM ratio=

Answer 8

Cm per unit/sales price per unit

portion of every sales € that contributes to covering fixed costs

Question 9

Use of the CM ratio is necessary

Answer 9

when a firm produces more than one product.

Question 10

A cost is

Answer 10

a resource that is sacrificed to achieve a particular objective

Question 11

To be relevant to a particular decision, a cost must : _______________and _______________

Answer 11

• relate to the objective

- differ from one possible decision outcome to the next

Question 12

A cost can be traced according to two major patterns: _____________and _______________

Answer 12

• cost behaviour

- cost assignment

Question 13

A unit fixed cost is

Answer 13

variable

Question 14

A unit variable cost is

Answer 14

fixed

Question 15

The limits of cost-driver activity within which a specific relationship between cost and the cost driver is
valid is called:
A. relevant range B. variable range
C. total range D. valid range

Answer 15

Relevant range

Question 16

15. Which of the following is not an assumption of cost-volume-profit analysis?
    a. The behavior of revenues and expenses is accurately portrayed and is linear over the relevant range.
    b. Efficiency and productivity will both increase.
    c. Sales mix will be constant.
    d. Expenses can be classified into variable and fixed categories. The inventory level at the end of the period will be insignificantly different from that at the beginning.

Answer 16

B

Question 17

Operating gearing =

Answer 17

the extent to which the total cost of some activity is fixed rather than variable

Question 18

contribution margin (traduction)

Answer 18

marge sous couts variables

Question 19

1. To be relevant to a particular decision, a cost must satisfy the following criteria:
2. It must relate to the objectives of the business
3. It must involve an outlay of cash
4. It must differ between possible courses of action
5. It must be based on objective, verifiable evidence

Answer 19

1&3

Question 20

two general types of cost system :

Answer 20

• traditional costing system and,

- activity-based cost accounting (ABC) systems.

Question 21

Which one of the following is not one of the 4 areas of decision making where management accounting information is required?
 A. Developing objectives and plans  B. Evaluating share price performance
 C. Allocating resources  D. Determining costs and benefits

Answer 21

B

Question 22

12.Which one of the following can be inventory costs?
A. raw materials B. Indirect labor C. Direct Labor D. Factory overhead
E. A,B,C and D F. only A,B, and C

Answer 22

E

Question 23

16. The objective of Activity Based Costing (ABC) is to derive the _________ cost of production.
     A. Relevant  B. Strategic  C. Marginal  D. Full

Answer 23

Full

Question 24

19. The difference between total sales in dollars and total variable expenses is called:
     A. net operating income.  B. net profit.  C. gross margin.  D. contribution

Answer 24

D

Question 25

The Hogs Head Inn pays off a long-term debt in full. Which of the following statements describes the effect of the sale on The Hogs Head Inn? A. current ratio increases; total debt to equity ratio decreases B. current ratio decreases; total debt to equity ratio increases C. current ratio decreases; total debt to equity ratio decreases D. current ratio increases; total debt to equity ratio increases

Answer 25

C

Question 26

iNDIRECT COSTS Cannot be directly linked to individual cost | A centres B drivers C objects D. pools

Answer 26

Objects=units

Question 27

? costing is used to describe the way in which we identify the full cost per unit of output where the units of output differ (2 marks) A Batch B Full C Job D Process

Answer 27

Job

Question 28

9. Consider the following two statements concerning cost-volume-profit analysis:  The contribution per unit is the difference between the sales price per unit and the fixed cost per unit  The marginal cost per unit will usually equal the variable cost per unit..

Answer 28

False/True

Question 29

12. When businesses are divided into departments for costing purposes, the ones where the products have work performed on them are known as which of the following? (1 mark) A Service Cost centers C Product Cost Centers B Performance Cost Centers D Overhead Cost Centers

Answer 29

Product

Question 30

14. Management accounting information can only be considered useful if it is capable of affecting people’s (1 mark) A opinions B attitudes C understanding D behaviour

Answer 30

Behaviour

Question 31

``` 2. The “ability of accounting information to influence decisions” is a description of a qualitative characteristic or attribute concerning the usefulness of accounting information to decision makers. Match the quality shown hereafter that best corresponds to that description. (1 mark) • A. Relevance • B. Reliability • C. Comparability • D. Understandability • E. Materiality ```

Answer 31

A Relevance

Question 32

11. Which of the following is a sign that an ABC system may be useful? (1 mark) • A. Indirect costs are a relatively small proportion of total product costs • B. Products are heterogeneous in nature and create differential demand on resources because of variations in volume, processing requirements, batch size or complexity • C. Products that a company is less suited to sell or produce show relatively higher profitability • D. Operations staff and accountants do not agree about what the costs of manufacturing and marketing of products should be

Answer 32

B

Question 33

12. A well-designed, activity-based cost system helps managers make better decisions because information derived from an ABC analysis: (1 mark) A. can be used to eliminate nonvalue-added activities B. is easy to analyze and interpret C. takes the choices and judgment challenges away from the managers D. emphasizes how managers can achieve higher sales

Answer 33

A

Question 34

14. Most international accounting standard concerning ____________________ ensures that most large businesses implement a full cost approach to income measurement. • expenses (1 mark) • retained earnings • inventories • depreciation

Answer 34

inventories

Question 35

``` 17. What is the minimum cost below which a company would be unwilling to price a one-off special contract? (1 mark) • A. full cost • B. variable cost • C. fixed cost • D. between variable cost and full cost ```

Answer 35

B

Question 36

18. Marginal cost pricing requires: (1 mark) • A. setting prices at a level low enough to encourage wide market acceptance of a product or service • B. setting high prices to make maximum profit before the price is lowered to attract the next target market • C. pricing output on the basis of its variable cost, normally with a profit loading • D. pricing output irrespectively of its cost.

Answer 36

C

Question 37

20. Which of the following are considered to be product costs under absorption costing? I. Variable manufacturing overhead. (1 mark) II. Fixed manufacturing overhead. III. Selling and administrative expenses. * A. I, II, and III. * B. I and II. * C. I and III. * D. I.

Answer 37

B