1. Know the differences and be able to classify costs into the following categories (look at examples we did in class and in homework).

Variable Costs

Fixed Costs

Mixed Costs

2. Know the key differences between Managerial Accounting and Financial Accounting.

Users of information ____________________________________________________

Type of information _____________________________________________________

Frequency of Analysis ______________________________________________________________________

3. What is Operating Leverage? ____________________________________________________________________________

Understand how Operating Leverage is impacted by higher fixed costs _____________________________________________________________________________

How is Operating Leverage impacted by higher variable costs? _____________________________________________________________________________

Which cost structure offers more security if volume expectations are not achieved? ______________________________________________________________________________

Which cost structure offers more risk but higher potential reward? _______________________

4. What is the format of the Contribution Margin Income Statement?

When is the Contribution Margin Format statement used?_____________________________________________________________________________