D196 Principles of Financial and Managerial Accounting - Set 5 - Part 3

Correct Answer: Variable cost per unit / Sales price per unit

The variable cost ratio is calculated by dividing the variable cost per unit by the sales price per unit.

Correct Answer: Income statement

The income statement reports revenues and expenses for a specific period, resulting in net income or loss.

Correct Answer: Debit supplies; credit cash

When supplies are purchased for cash, the supplies account is debited, and cash is credited.

Correct Answer: Accounts receivable

Accounts receivable is a current asset because it is expected to be converted into cash within one year.

Correct Answer: Direct materials

Direct materials are included in the cost of goods sold because they are directly related to production.

Correct Answer: Income statement

The income statement summarizes a companys revenues and expenses over a specific period, resulting in net income or loss.

Correct Answer: Paying dividends

Paying dividends is a financing activity because it involves distributing cash to shareholders.

Correct Answer: 2,000 units

Break-even in units is calculated by dividing fixed costs by the contribution margin per unit. ($50,000 / $25 = 2,000 units).

Correct Answer: Property taxes

Property taxes are a fixed cost because they remain the same regardless of production levels.

Correct Answer: Balance sheet

The balance sheet shows a companys assets, liabilities, and equity at a specific date, reflecting its financial position.