Cost Behavior Analysis: Fixed, Variable and Mixed Costs for Decision Making

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Economics - Managerial Economics

andrsonztdc Created by 10 mon ago

Cards in this deck(40)

Managers use cost-volume-profit analysis to make predictions such as how many units must we sell to break even, what sales volume is needed to earn a target income, and how much will income change if we buy a new machine to reduce labor costs. These predictions help in understanding _____?

Total fixed costs _____ as the volume changes.

Unit fixed costs _____ as volume increases.

Total variable costs _____ in proportion to volume changes.

Unit variable costs _____ as volume changes.

Mixed costs include _____ components.

When the volume is zero, the mixed costs are still _____.

Mixed cost increases steadily in proportion to _____ in volume.

A step-wise cost has a step pattern in costs within a _____ of current production volume.

The normal operation range for a business is called the _____ range.

Which of these are examples of fixed costs? _____

Which of these are examples of variable costs? _____

Which of these are examples of mixed costs? _____

Which of these are examples of step-wise costs? _____

Three methods to estimate fixed and variable costs are _____, High-Low method, and Regression.

The formula for variable cost per unit is (cost at highest volume - cost at lowest volume) / (highest volume - lowest volume). This formula helps in determining _____?

The total cost formula is fixed costs + (variable cost per unit * number of units). This formula is used to calculate _____?

Regression is commonly used with _____ to analyze cost behavior.

The contribution margin per unit formula is selling price per unit - variable cost per unit. This formula helps in determining _____?

The contribution margin ratio formula is contribution margin per unit / selling price per unit. This ratio indicates _____?

The break-even point is the sales level where total sales equals total costs. At this point, a company _____?

The break-even point can be stated in _____ or dollars of sales.

What are the three methods to find the break-even point? _____, contribution margin income statement, and cost-volume-profit chart.

The break-even point formula is Fixed costs / contribution margin per unit. This formula is used to calculate _____?

If the sales price per unit increases, the break-even point _____?

If the sales price per unit decreases, the break-even point _____?

If the variable cost per unit increases, the break-even point _____?

If the variable cost per unit decreases, the break-even point _____?

If the fixed cost in total increases, the break-even point _____?

If the fixed cost in total decreases, the break-even point _____?

The Margin of Safety (in percent) formula is (expected sales - break even sales) / expected sales. This formula helps in determining _____?

The dollar sales at target income formula is fixed costs + target income / contribution margin ratio. This formula is used to calculate _____?

The unit sales at target income formula is (fixed costs + target income) / contribution margin per unit. This formula helps in determining _____?

The CVP formulas can be modified for use when a company sells more than one product. The unit contribution margin is replaced with _____ if this is the case?

Sales mix is the proportion of _____ for each product.

The weighted-average contribution margin formula is Contribution Margin per unit x Sales Mix Percentage. This formula helps in determining _____?

The degree of operating leverage (DOL) is a measure of the effects of change in the level of sales on _____?

The Degree of Operating Leverage Formula is Contribution Margin / Net Income. This formula helps in determining _____?

The changes in income formula is DOL x changes in sales. This formula is used to calculate _____?

The Income under absorption costing formula is income under variable costing + fixed overhead cost in ending inventory - fixed overhead cost in beginning inventory. This formula helps in determining _____?

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