Instructions: Designate whether each of the following statements is true or false by circling the T or F. TF 1.Contribution margin is the amount of revenue left over to cover selling and administrative costs after manufacturing costs have been deducted. TF 2.The margin of safety is the difference between actual profit and target net income. TF 3. At the break-even point, total contribution margin is equal to total fixed costs. TF 4.A company’s break-even point can be decreased by increasing the contribution margin ratio. TF 5.A CVP income statement classifies costs by function, but a traditional income statement classifies costs by cost behavior (variable or fixed).
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Instructions: Designate whether each of the following statements is true or false by circling the T or F.
TF 1.Contribution margin is the amount of revenue left over to cover selling and administrative
TF 2.The margin of safety is the difference between actual profit and target net income.
TF 3. At the break-even point, total contribution margin is equal to total fixed costs.
TF 4.A company’s break-even point can be decreased by increasing the contribution margin ratio.
TF 5.A CVP income statement classifies costs by function, but a traditional income statement classifies costs by cost behavior (variable or fixed).
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