After studying this chapter you should understand and be able to |
LO 12-1 | Explain the management planning and control cycle. |
LO 12-2 | Identify the major differences between financial accounting and managerial accounting. |
LO 12-3 | Describe the difference between variable and fixed cost behavior patterns and the simplifying assumptions made in this classification method. |
LO 12-4 | Demonstrate why expressing fixed costs on a per unit of activity basis is misleading and may result in faulty decisions. |
LO 12-5 | Explain what types of costs are likely to have a variable cost behavior pattern and what types of costs are likely to have a fixed cost behavior pattern. |
LO 12-6 | Use the high–low method to determine the cost formula for a cost that has a mixed behavior pattern. |
LO 12-7 | Explain and illustrate the difference between the traditional income statement format and the contribution margin income statement format. |
LO 12-8 | Use the contribution margin format to analyze the impact of cost and sales volume changes on operating income. |
LO 12-9 | Calculate the contribution margin ratio and explain how it can be used in CVP analysis. |
LO 12-10 | Analyze how changes in the sales mix can affect projections using CVP analysis. |
LO 12-11 | Describe the meaning and significance of the break-even point and illustrate how the break-even point is calculated. |
LO 12-12 | Use operating leverage to evaluate cost structures. |