Question

Listed below are nine technical accounting terms introduced:

Variable costs Relevant range Contribution margin
Break-even point Fixed costs Semi-variable costs
Economies of scale Sales mix Unit contribution margin


Each of the following statements may (or may not) describe one of these technical terms. For each statement, indicate the accounting term described, or answer "None" if the statement does not correctly describe any of the terms.

a. The level of sales at which revenue exactly equals costs and expenses.
b. Costs that remain unchanged despite changes in sales volume.
c. The span over which output is likely to vary and assumptions about cost behavior generally remain valid.
d. Sales revenue less variable costs and expenses.
e. Unit sales price minus variable cost per unit.
f. The reduction in unit cost achieved from a higher level of output.
g. Costs that respond to changes in sales volume by less than a proportionate amount.
h. Operating income less variable costs.

Answer 1

a. Break-even point

b. Fixed costs.

c. Relevant range.

d. Contribution margin.

e. Unit contribution margin.

f. Economies of scale

g. Semi-variable costs.

h. None.

Step-by-step explanation:

a. The level of sales at which revenue exactly equals costs and expenses: Break-even point.

b. Costs that remain unchanged despite changes in sales volume: Fixed Costs.

c. The span over which output is likely to vary and assumptions about cost behavior generally remain valid: Relevant range.

d. Sales revenue less variable costs and expenses: Contribution margin.

e. Unit sales price minus variable cost per unit: Unit contribution margin.

f. The reduction in unit cost achieved from a higher level of output: Economies of scale.

g. Costs that respond to changes in sales volume by less than a proportionate amount: Semi-variable costs.

h. Operating income less variable costs: None.