Source Remarks Financial Accounting: Although explicit recognition of non production volume related cost drivers is a key concept in activity based costing, the idea is ignored in the conventional linear CVP model. This is because at high volume production levels, the inputs labor, materials etc.

No marks will be given for answers written in a medium other than the authorized one. Now we will examine the implications of each assumption. Overall questions are of graduation level only.

The fifth and last assumption is that units produced are equal to units sold.

I did not prepare this section in detail, since it is highly unpredictable and I suggest not to waste much time in it. However,in both the years mix of theory and practical was there. Since the total revenue and total cost functions are linear, the profit function is also linear.

Both sections two and three are more mechanical than conceptual and are mainly illustrated with a series of related equations.

For short answers, write the basic definition and then directly hit the core. Make use of all chapters and topics in your answers but basic tone of answer should be maintained like for HR answers,focus more on such dimensions Managerial accounting question answers less of OB etc.

All five equations are variations of the basic conceptual equation stated above. When the price is decreased from P1 to P2, the quantity purchased, or demanded, increases from X1 to X2.

Choice here is more important as little knowledge of every question shall be there. Try to attempt more numerials than theory. Each price corresponds to a specific sales quantity. Assume suitable data, if considered necessary, and indicate the same clearly.

This means that we are changing from one conventional linear problem to a somewhat different conventional linear problem. Define and use the margin of safety. To use the CVP model, a company must separate total costs into fixed and variable categories using one of the methods described in Chapter 3.

As variable inputs are added to production, each input generates more output than the previous input. Constant Variable cost per unit The second assumption of the conventional linear cost-volume-profit approach is that the variable cost per unit of output is constant. Another way to describe this is to say that consumers are willing and able to buy any quantity the company offers for sale at a constant price.

The profit area is between the two break-even points, thus trying to achieve the maximum level of production and sales will produce losses rather than increased profits. There are two break-even points where total revenue and total cost are equal. Answers must be written in the medium authorized in the Admission Certificate which must be stated clearly on the cover of this Question-cum-Answer QCA Booklet in the space provided.

A more realistic down sloping demand function see Figure illustrates what economists refer to as the law of demand. Remember that fixed costs are those costs that do not vary with changes in the activity level. CB Gupta,RC notes and answers. The fourth assumption is that the sales mix will remain constant during the planning period for a multiproduct company.

Besides, large portion of the syllabus is static in nature. To Opt or not to opt?

This creates another thought provoking controversial issue. This assumption along with the assumption concerning constant fixed cost will be relaxed in the following chapter where we will use the conventional linear CVP model to consider the differences between direct costing and full absorption costing.

This causes both the production function to be linear see Figure and the average variable cost function to be horizontal see Figure Feb 19,  · I've literally tried everything. What are we multiplying the percentages by?

Any help is appreciated. Thanks in advance! Assigning Costs to Activities, Resource Drivers The Receiving Department has three activities: unloading, counting goods, and inspecting.

Unloading uses a forklift that is leased for \$15, per year. The forklift is Status: Open. Management Accounting: Concepts, Techniques & Controversial Issues Chapter 11 Conventional Linear Cost-Volume-Profit Analysis. James R. Martin, Ph.D., CMA Professor Emeritus, University of South Florida. MAAW's Textbook Table of Contents.

Financial Accounting textbook solutions and answers from Chegg. Get help now! "I have taken Accounting classes THREE DIFFERENT TIMES and failed every time - until now.

Thanks to AccountingCoach, I finally understand the basic Accounting concepts that I couldn't figure out in a fast-paced classroom setting. Sample Test for Management Accounting Multiple Choice Identify the letter of the choice that best completes the statement or answers the question.

1. Which phrase best describes the current role of the managerial accountant? a. Managerial accountants prepare the financial statements for an organization.

The goal of managerial accounting is to provide the information that managers need for all of the following EXCEPT.