MA Workshop 1

Management accounting is about ...

• Managers making informed decisions

• Forward-looking

• Internal reporting

• Costs!

Variable costs are _____ .

• not related to activity

• related to activity

• an activity

• should not be an activity

If the variable costs go down as activity goes up, then these are ...

• proportional variable costs

• digressive variable costs

• progressive variable costs

• not reliable variable costs

Fixed costs ...

• do not vary with level of activity

• over a longer period of time, can change

• are too fixed

• cost too much

We need to know cost per unit so that we can ...

• calculate profit

• establish selling prices

• value inventory

• make budgets

Normal production (N) is ...

• can be abnormal

• average production over a certain period

• not a good production number

• not same for all companies

Formula for standard full cost price:

• Total fixed costs / N

• Variable cost / No of units

• (Total variable costs / N ) + Fixed cost per unit

• (Total fixed costs / N ) + Variable cost per unit

A company breaks even when it ...

• makes the first profit

• has to close down

• has no loss or profit

• has the first loss

Calculation for break-even is:

• Total contribution margin / Cost per unit

• Total fixed costs / Contribution margin per unit

• Total fixed costs / variable cost per unit

• Total variable costs / Contribution margin per unit

Average cost will become ___ if production increases.

• Higher

• Lower

• Stay the same

• Don't know