Management Accounting - Study Mode

[#276] Fixed cost is added to target operating income and then divided to contribute margin per unit to calculate
Correct Answer

(A) quantity of units required to sold

Explanation

Solution: Fixed cost is added to target operating income and then divided to contribute margin per unit to calculate quantity of units required to sold.

[#277] Contribution margin is $34000 and operating income is $12000, then degree of operating leverage will be
Correct Answer

(B) 2.84

Explanation

Solution: Degree of operating leverage = Contribution margin ÷ Operating income = $34000 ÷ $12000 = 2.84.

[#278] If budgeted sales in unit is 50 and breakeven sales in unit is 12, then margin of safety in units will be
Correct Answer

(B) 38

Explanation

Solution: Margin of safety = Budgeted sales - Breakeven sales = 50 - 12 = 38 units.

[#279] Type of distribution, which consists of alternative outcomes and probabilities of events is classified as
Correct Answer

(C) decision table

Explanation

Solution: Type of distribution, which consists of alternative outcomes and probabilities of events is classified as decision table. Decision tables are a concise visual representation for specifying which actions to perform depending on given conditions.

[#280] An effect of fixed cost to change in operating income is classified as
Correct Answer

(D) operating leverage

Explanation

Solution: An effect of fixed cost to change in operating income is classified as operating leverage. Operating leverage is a cost-accounting formula that measures the degree to which a firm or project can increase operating income by increasing revenue. A business that generates sales with a high gross margin and low variable costs has high operating leverage.