Exam 1 Concepts
What does the income statement show?
Revenue - expenses = net income
What is the Accounting equation?
Assets = Liabilities + Stockholders Equity
What is a mixed cost?
Cost that contains a variable and fixed portion.
Jolie Beans sold 250 packs of jelly beans, with a revenue of $500. Variable costs were $200 and fixed costs were $100. What is the UNIT contribution margin?
$1.20
Who is the Department head of accounting here at Kstate??
Brett Wilkinson
What represents a future obligations for a company.
Liability
If assets are 370,0000 and liabilities are 120,000. What is equity?
250,000
Type of cost that remains constant in total with changes in the level of activity, but varies on a per-unit level?
A fixed cost.
If the activity level increases by 35%, total variable costs will ...
Increase by 35%
Where is the first place I should look when starting the budgeting process?
past performance
What accounts decrease equity?
1. Expenses
2. Revenues
3. Dividends
4. Assets
Expenses and dividends
If I decrease my accounts payable by $20... what account also decreases? By how much?
Decrease cash (assets) by $20
How is a Cost Volume Profit Income statement different from a regular income statement?
It computes contribution margin rather than gross profit. It also breaks costs and expenses into variable and fixed components.
Nike reported the following information for the current year:
Sales (600 units) $6,000, direct materials and direct labor $1,000, other variable costs $500, and fixed costs $2,000.
What is Nike's contribution margin ratio?
0.75 or 75%
Jolie expects to sell 30 cars in January, 40 cars in February, and 35 cars in March. She expects to sell them for $5 in the first two months and $6 in march. What are her expected sales dollars for each month AND her expected total sales for the first quarter?
Expected sales dollars:
January: 30 x 5 = 150
Feb: 40 x 5 = 200
March: 35 x 6 = 210
Total sales for first quarter = 560
Which financial statement shows the financial position of the company at a specific point in time?
Balance Sheet
Jolie Beans Jelly Beans started the year with $300 in assets and $200 in liabilities. During the year Jolie beans made $500 in revenues and had $250 in expenses. At the end of the year, Jolie Beans payed $100 in dividends. What was the Net Income for the year?
$250
What method can be used to break a mixed cost down into its two components?
High-low method.
Jolie sells toy cars that have a unit selling price of $10, unit variable cost of $5, and total fixed costs of $300,000.
The total break-even units are:
60,000 units (cars)
Which management function is budgeting most related to?
Planning
What are the 3 sections of the statement of cash flows?
Cash flow from operations, cash flow from investing, cash flow from financing
The following are three business transactions. For each column, indicate whether the transactions increased (+), decreased (-), or had no effect (NE) on assets, liabilities, and stockholder's equity.
a. Purchased Equipment on account.
b. Payment of cash dividends.
c. Paid expenses in cash.
Assets Liabilities Stockholder's Equity
a.
b.
c.
a. Increase assets and Liabilities
b. decrease assets and SE
b. Decrease assets and SE
Name an alternative that could be considered under incremental analysis... (multiple answers will be correct)
Make vs. buy
Accept/Reject order
Repair/replace
Sell/process further
Eliminate unprofitable business segment
For Wildcat Co., sales are $10,000, fixed expenses are $800 and the contribution margin ratio is 35%.
What are required sales in dollars to earn a target net income of $1,500?
$6,571.42
What is Jolie's favorite candy?
Mini M&Ms