154. The ______________ income statement classifies cost as variable or fixed and computes a contribution margin.
155. _________________ tells a company how far sales can drop before it will be operating at a loss.
156. ___________________ is the relative percentage in which a company sells its multiple products.
157. When more than one product is sold, the break-even point can be determined by dividing fixed expenses by _______________________.
158. When a company has ________________, management must decide which products to make and sell in order to maximize net income.
159. ___________________ refers to the relative proportion of fixed versus variable costs that a company incurs.
160. The _________________________ provides a measure of a company’s earnings volatility and can be used to compare companies.
a161. Under _____________________ all manufacturing costs are charged to, or absorbed by, the product.
a162. Fixed manufacturing costs are treated as period costs under ______________________.
a163. When production exceeds sales, a portion of the _____________________ is deferred to a future period as part of the cost of ending inventory under absorption costing, but not under variable costing.
a164. When units produced exceed units sold, income under absorption costing is ___________ than income under variable costing.
a 165. Management may be tempted to overproduce in a given period in order to increase net income if _______________ is used for internal decision making.
SHORT-ANSWER ESSAY QUESTIONS
S-A E 166
A CVP income statement is frequently prepared for internal use by management. Describe the features of the CVP income statement that make it more useful for management decision-making than the traditional income statement that is prepared for external users.
S-A E 167
Nancy Sound, president of Crosley Corp., has heard about operating leverage and asks you to explain this term. What is operating leverage? How does a company increase its operating leverage?
aS-A E 168
Define variable costing and absorption costing. What are some of the benefits to a manager from using variable costing instead of absorption costing for internal decision making?
aS-A E 169
How do differences in production and sales levels affect income under absorption and variable costing?