Cash Flows Differ with Respect to Their Degree of Certainty

question 29

Multiple Choice

Cash flows differ with respect to their degree of certainty.Which of the following can be forecasted the easiest?

• A)Cash outflows
• B)Current cash inflows
• C)Seasonal cash requirements
• D)Future cash inflows

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Definitions:

Contribution Margin Ratio

The percentage of each dollar of sales that is available to apply to fixed costs and contribute to net income; calculated as unit contribution margin divided by unit selling price.

Unit Contribution Margin

The amount of revenue remaining per unit after deducting variable costs; calculated as unit selling price minus unit variable costs.

Unit Sales Price

The amount that a business charges for one unit of its product or service.

High-Low Method

A technique used in cost accounting to estimate variable and fixed costs based on the highest and lowest levels of activity.