Week 3 Assignment from Textbook
Week 1 Assignment from Textbook: Chapter 20, 21 & 22
Esther Tate
ACC/400
July 19, 2015
Theresa Pekron
Exercise 20.1 – Accounting Terminology
Listed below are nine technical accounting terms introduced in this chapter:
Variable costs
Relevant range
Contribution margin
Break-even point
Fixed costs
Semi variable costs
Economics of scale
Sales mix
Unit contribution margin
Each of the following statements may (or may not) describe one of these technical terms. For each statement, indicate the accounting term described, or answer “None” if the statement does not correctly describe any of the terms.
a. The level of sales at which revenue exactly equals costs and expenses. Break-even point.
b. Costs remain unchanged despite changes in sales volume. Fixed Costs.
c. The span over which output is likely to vary and assumptions about cost behavior generally remain valid. Relevant Range.
d. Sales revenue less variable costs and expenses. Contribution margin.
e. Unit sales price minus variable cost per unit. Unit contribution margin.
f. The reduction in unit cost achieved from a higher level of output. Economics of scale.
g. Costs the respond to changes in sales volume by less than a proportionate amount. Semi variable costs.
h. Operating income less variable costs. “None”.
Exercise 20.7 – Using Cost-Volume-Profit Formulas
MURDER TO GO! Writes and manufactures murder mystery parlor games that it sells to retail stores. The following is per unit information relating to the manufacture and sale of this product:
Unit sales price…….……………………………………. $ 30.00
Variable cost per unit…………………………………… $ 6.00
Fixed costs per year……………………………………. $360,000.00
Determine the following, showing as part of your answer the formula that you used in your computation. For example, the formula used to determine the contribution margin ratio (part a) is Contribution Margin Ration = Unit Sales Price – Variable Costs per Unit Unit Sales Price
a.
Esther Tate
ACC/400
July 19, 2015
Theresa Pekron
Exercise 20.1 – Accounting Terminology
Listed below are nine technical accounting terms introduced in this chapter:
Variable costs
Relevant range
Contribution margin
Break-even point
Fixed costs
Semi variable costs
Economics of scale
Sales mix
Unit contribution margin
Each of the following statements may (or may not) describe one of these technical terms. For each statement, indicate the accounting term described, or answer “None” if the statement does not correctly describe any of the terms.
a. The level of sales at which revenue exactly equals costs and expenses. Break-even point.
b. Costs remain unchanged despite changes in sales volume. Fixed Costs.
c. The span over which output is likely to vary and assumptions about cost behavior generally remain valid. Relevant Range.
d. Sales revenue less variable costs and expenses. Contribution margin.
e. Unit sales price minus variable cost per unit. Unit contribution margin.
f. The reduction in unit cost achieved from a higher level of output. Economics of scale.
g. Costs the respond to changes in sales volume by less than a proportionate amount. Semi variable costs.
h. Operating income less variable costs. “None”.
Exercise 20.7 – Using Cost-Volume-Profit Formulas
MURDER TO GO! Writes and manufactures murder mystery parlor games that it sells to retail stores. The following is per unit information relating to the manufacture and sale of this product:
Unit sales price…….……………………………………. $ 30.00
Variable cost per unit…………………………………… $ 6.00
Fixed costs per year……………………………………. $360,000.00
Determine the following, showing as part of your answer the formula that you used in your computation. For example, the formula used to determine the contribution margin ratio (part a) is Contribution Margin Ration = Unit Sales Price – Variable Costs per Unit Unit Sales Price
a.