Each of the following statements may (or may not) describe one ofthese technical

Question

Each of the following statements may (or may not) describe one ofthese technical terms. In the space provided below each statement,indicate the accounting term described, or answer“None” if the statement does not correctly describe anyof the terms.

(a) The amount by which sales revenue exceeds total variable costexpressed as a percentage of sales.

(b) The amount by which sales volume exceeds the break-evenpoint.

(c) The study of financial statements by a potential investor orcreditor as a means of evaluating the profitability and solvency ofa business.

(d) A type of activity that has a causal effect in the occurrenceof a particular cost.

(e) The level of sales at which revenue equals operatingexpenses.

(f) A cost that responds to changes in sales volume by less than aproportionate amount.

(g) A mathematical technique used to determine the fixed andvariable elements of a mixed or semi-variable cost.

Explanation / Answer

(b) The amountby which sales volume exceeds the break-even point.
         Marginof safety

(g) Amathematical technique used to determine the fixed and variableelements of a mixed or semi-variable cost.
         High low method

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