Accounting 200 Exam Ii

Front 1

Contribution Income Statement

Back 1

Sales
-Variable Costs
=Contribution Margin
-Fixed Costs
=Income from operations

Front 2

Contribution Margin

Back 2

Sales less variable cost of goods sold and variable selling and administrative expenses.

Front 3

Contribution Margin Formula

Back 3

Sales - Varabile costs = Contribution margin

Front 4

Unit Contribution margin formula

Back 4

Sales price per unit - variable costs per unit

Front 5

Contibution Margin Ratiot

Back 5

Indicates the percentage of each sales dollar available to cover the fixed costs and to provide income from operations

Front 6

Contribution Margin Ratio Formula

Back 6

(Sales-Variable Costs)/Sales

Front 7

Break Even Sales Point

Back 7

The level of operations at which a business's revenues and expired costs are exactly equal. Revenues = Costs.

Front 8

Break Even Sales (units) Formula

Back 8

Fixed Costs / unit contribution margin

Front 9

Target profit Formula

Back 9

Sales(units)= (fixed costs+target profit) / (Unit contribution margin)

Front 10

Profit Markup

Back 10

Expressed as a percentage of cost. This percentage is then multiplied by the cost amount per unit. The dollar amount of the markup is then added to the cost amount per unit to arrive at the selling price.

Front 11

Markup Percentage Formula

Back 11

Desired profit / total costs
This number is expressed as a percentage.

Front 12

Markup per unit formula

Back 12

desired profit/total costs = markup percentage, then total cost per calculator x percentage markup

Front 13

Production Bottleneck

Back 13

Occurs at the point in the process where the demand for the company's product exceeds the ability to produce the products. When a company has a bottleneck in its production process, it should attempt to maximize its profitability subject to the influence of the bottleneck. The correct measure of performance is the value of each bottleneck hour, or the contribution margin per bottleneck hour.

Front 14

Rate of Return on Investment Formula

Back 14

Income from operations / Invested Assets

Front 15

Rate of Return on Investment (profit Margin) Formula

Back 15

profit margin x investment turnover

Front 16

Markup Percentage Formula

Back 16

Desired profit / total costs
This number is expressed as a percentage.

Front 17

Markup per unit formula

Back 17

desired profit/total costs = markup percentage, then total cost per calculator x percentage markup

Front 18

Production Bottleneck

Back 18

Occurs at the point in the process where the demand for the company's product exceeds the ability to produce the products. When a company has a bottleneck in its production process, it should attempt to maximize its profitability subject to the influence of the bottleneck. The correct measure of performance is the value of each bottleneck hour, or the contribution margin per bottleneck hour.

Front 19

Rate of Return on Investment Formula

Back 19

Income from operations / Invested Assets

Front 20

Rate of Return on Investment (profit Margin) Formula

Back 20

profit margin x investment turnover

Front 21

Markup Percentage Formula

Back 21

Desired profit / total costs
This number is expressed as a percentage.

Front 22

Markup per unit formula

Back 22

desired profit/total costs = markup percentage, then total cost per calculator x percentage markup

Front 23

Production Bottleneck

Back 23

Occurs at the point in the process where the demand for the company's product exceeds the ability to produce the products. When a company has a bottleneck in its production process, it should attempt to maximize its profitability subject to the influence of the bottleneck. The correct measure of performance is the value of each bottleneck hour, or the contribution margin per bottleneck hour.

Front 24

Rate of Return on Investment Formula

Back 24

Income from operations / Invested Assets

Front 25

Rate of Return on Investment (profit Margin) Formula

Back 25

profit margin x investment turnover

Front 26

Rate of Return on Investment (investment turnover) Formula

Back 26

(Income from operations / Sales) x (Sales / Invested Assets)

Front 27

Balanced Scorecard

Back 27

A set of financial and non financial measure that reflect multiple performance dimensions of a business. A common balanced scorecard design measure performance in the innovation and learning, customer, internal, and financial dimensions of a business.

Front 28

Innovation and Learning Perspective (balanced scorecard)

Back 28

Measures the amount of innovation in an organization.

Front 29

Customer Perspective (balanced scorecard)

Back 29

Measure customer satisfaction, loyalty, and perceptions

Front 30

Internal Perspective (balanced scorecard)

Back 30

Measures the effectiveness and efficiencey of internal business processes.

Front 31

Financial Perspective (balanced scorecard)

Back 31

Measures the economic performance of the responcibility center.

Front 32

Balanced Scorecard Purposes

Back 32

Designed to revel the underlying nonfinancial drivers, or causes of financial performance. I helps managers consider trade-offs between short and long- term performance. 40% of companies use or are planning to use the balanced scorecard, thus it is gaining acceptance because of its ability to reveal the underlying causes of financial performance while helping managers consider the short and long term implications of their decisions.

Front 33

Cash Payback Period

Back 33

The expected period of time that will elapse between the date of the capital expenditure and the complete recovery in cash (or equivalent) of the amount invested. The time required for the net cashflow to equal the initial outlay for the fixed asset is the payback period.

Front 34

Cash Payback Period Formula

Back 34

Fixed Asset / Annual net cash flows: annual cash revenue-annual cash expense.

Front 35

Cash Payback Method Benefits

Back 35

Widely used in evaluating proposals for investments in new projects. A short payback period is desirable because the sooner the cash is recovered, the sooner it becomes available for reinvestment. Also reduces outside risks when payback period is short. This method is especially useful to managers whose primary concery is liquidity.

Front 36

Casg Payback Method Deficiencies

Back 36

The cash payback method is that is ignores cash flows occuring after the payback period. In addition, the cash payback method does not use present value concepts in valuing cash flows occuring in different periods.