Farmer Accounting 2102 Test 3 Conceptual Questions and Answers | Latest Version | 2024/2025 | 100% Pass
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Course
Farmer Accounting 2102
Institution
Farmer Accounting 2102
Farmer Accounting 2102 Test 3
Conceptual Questions and Answers |
Latest Version | 2024/2025 | 100% Pass
What is the primary purpose of managerial accounting?
The primary purpose of managerial accounting is to provide information to internal users for
decision-making, planning, and control.
...
Farmer Accounting 2102 Test 3
Conceptual Questions and Answers |
Latest Version | 2024/2025 | 100% Pass
What is the primary purpose of managerial accounting?
✔✔ The primary purpose of managerial accounting is to provide information to internal users for
decision-making, planning, and control.
Define the term "cost behavior."
✔✔ Cost behavior refers to how a cost changes in relation to changes in production volume or
business activity levels.
What is a contribution margin?
✔✔ Contribution margin is the difference between sales revenue and variable costs, indicating
how much revenue is available to cover fixed costs and contribute to profit.
Explain the concept of "break-even analysis."
✔✔ Break-even analysis determines the sales level at which total revenues equal total costs,
resulting in neither profit nor loss.
1
, What are fixed costs?
✔✔ Fixed costs are expenses that do not change regardless of the level of production or sales,
such as rent and salaries.
What is a variable cost?
✔✔ A variable cost is an expense that varies directly with the level of production or sales, such
as raw materials.
Define "operating leverage."
✔✔ Operating leverage measures the proportion of fixed costs in a company’s cost structure,
indicating how changes in sales volume will affect profits.
What does "budget variance" refer to?
✔✔ Budget variance refers to the difference between budgeted amounts and actual financial
performance, highlighting discrepancies.
Explain the term "responsibility accounting."
✔✔ Responsibility accounting is a system that segments financial data by areas of responsibility
within an organization to evaluate performance.
2
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