Management Accounting - Study Mode
[#281] Target operating income is multiplied to tax rate and then subtracted from target operating income to calculate
Correct Answer
(B) target net income
Explanation
Solution: Target operating income is multiplied to tax rate and then subtracted from target operating income to calculate target net income. Target income is the profit that the managers of a company expect to attain for a designated accounting period.
[#282] If sales volume variance is $8500 and static budget amount is $2000, then flexible budget amount would be
Correct Answer
(A) $6,500
Explanation
Solution: Flexible budget amount = Sales volume variance - Static budget amount = $8500 - $2000 = $6,500.
[#283] Difference between static budget amount and flexible budget amount is named as
Correct Answer
(B) sales volume variance
Explanation
Solution: Difference between static budget amount and flexible budget amount is named as sales volume variance. Sales volume variance is the change in revenue or profit caused by the difference between actual and budgeted sales units.
[#284] Corporate sustaining costs and distribution channel costs are also classified as
Correct Answer
(C) fixed costs
Explanation
Solution: Corporate sustaining costs and distribution channel costs are also classified as fixed costs. A fixed cost is a cost that does not change with an increase or decrease in the amount of goods or services produced or sold. Fixed costs are expenses that have to be paid by a company, independent of any specific business activities.
[#285] In customer cost hierarchy, costs of all activities incurred to sell group of units to end consumers are classified as
Correct Answer
(C) customer batch-level costs
Explanation
Solution: In customer cost hierarchy, costs of all activities incurred to sell group of units to end consumers are classified as customer batch-level costs. Batch-level costs are expenses related to a group of products that cannot readily be traced back to an individual item. In other words, these production costs are incurred to produce a set of products or a batch and can't be allocated to an individual unit.