Fixed/Variable Costs
What type of cost remains constant regardless of production volume?
Fixed Cost
What term describes the point where total revenue equals total costs?
Break-Even Point
What is a detailed financial plan for a specific period called?
Budget
What is calculated as sales minus variable costs?
Contribution Margin
What term describes the total value of goods and services produced by a company?
Revenue
Rent on a factory building is an example of this type of cost.
Fixed Cost
In CVP analysis, what is the difference between sales price per unit and variable cost per unit?
Contribution Margin per Unit
What is one benefit of budgetting?
Identify bottlenecks + many more
If a product sells for $80 and variable costs are $50, what is the contribution margin per unit?
$30
This financial statement shows a company’s assets, liabilities, and equity at a point in time.
Balance Sheet
If the cost of raw materials increases as production increases, what type of cost is it?
Variable Cost
If a company sells 500 units at $20 each, with variable costs of $12 per unit and fixed costs of $2,000, what is its profit?
$2,000
If a company budgets $20,000 for labor at 1,000 hours but spends $22,000 at 1,100 hours, what is this difference called?
Variance
A company has a contribution margin of $40,000 and sales of $100,000. What is the contribution margin ratio?
40% ($40,000 ÷ $100,000)
If a company has $50,000 in assets and $20,000 in liabilities, what is its equity?
$30,000
A cost that has both fixed and variable components, like a utility bill, is called what?
Mixed Cost (or Semi-Variable Cost)
What happens to the break-even point if fixed costs increase, assuming all else stays the same?
It increases
Name two common types of budgets used in managerial accounting.
Examples: Operating Budget, Capital Budget, Cash Budget, Master Budget
If contribution margin is $25 per unit and fixed costs are $15,000, how many units must be sold to earn a profit of $10,000?
1,000 units (($15,000 + $10,000) ÷ $25)
What does the acronym FIFO mean in inventory management?
First In, First Out
If a company produces 1,000 units and total fixed costs are $10,000, what is the fixed cost per unit?
$10
A company has fixed costs of $5,000, a selling price of $50 per unit, and variable costs of $30 per unit. How many units must it sell to break even?
250 units
A flexible budget shows variable costs of $5 per unit and fixed costs of $10,000. What is the total budgeted cost for 3,000 units?
$25,000 ($5 × 3,000 + $10,000)
Sales are $150,000, contribution margin ratio is 30%, and fixed costs are $35,000. What is the operating income?
$10,000 (CM = $45,000, profit = $45,000 - $35,000)
What does ROI stand for in a business context?
Return on Investment