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35 Cards in this Set
- Front
- Back
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break even point ($)
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fixed costs/cm ratio
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total overhead cost
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fc + (vc/unit * volume)
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break even point (units)
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fc/cm per unit
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high/low method
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change in cost/change in volume = vc per unit
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after tax cost
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= before tax cost * (1-tax rate)
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contribution margin ratio
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cm$/sales$
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sales volume to reach after tax profit
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(fc + atp/(1-tr))/cm per unit
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after tax income
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pretax income * (1 - tax rate)
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constraint
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a restriction that occurs when the capacity to manufacture a product or to provide a service is limited
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vertical integration
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accomplished when a company is involved in multiple steps of the value chain
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make or buy decision
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short term decision to outsource labor from another company
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step costs
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costs that vary with activity in steps and may be treated as fixed or variable costs
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special order decisions
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decisions to decide what sales price is appropriate when customers place special orders
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independent variable
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the variable in regression analysis that drives changes in the dependent variable
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dependent variable
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the variable in regression analysis that is dependent on changes in the independent variable
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resource utilization decision
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a decision requiring an analysis of how best to use a resource in limited supply
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variable costing
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method of costing in which product costs include dm, dl, and vfoh; ffoh is treated as a period cost
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absorption costing
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method of costing in which product costs include dm, dl, ffoh, and vfoh
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operation leverage
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cm/ni
indicated of how sensitive net income is to change in sales |
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break even point
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level of sales at which cm just covers fc and ni=0
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contribution margin ratio
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cm/sales
used to calculate the change in cm resulting from a dollar change in sales |
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contribution margin per unit
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sales price per unit - variable costs
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gross profit
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sales - COGS
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R-squared (R^2)
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how well the regression line fits the data
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regression analysis
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fits a cost line through a number of data points
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cost behavior
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how costs react to changes in production volume
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fixed costs
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costs that remain the same in total but vary by unit volume
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variable costs
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costs that stay the same per unit but change in total as production volume changes
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relevant range
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the normal range of production that can be expected
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mixed costs
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include both a fixed and variable component making it difficult to predict behavior
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after tax benefit
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pretax receipts * (1-tax rate)
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after tax income
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pretax income * (1-tax rate)
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target profit (before tax)
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= sales - variable costs - fixed costs
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sales volumes (to reach target profit before tax)
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(fc + tp)/cm
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theory of constraints
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management tool for dealing with constraints; indentifies and focuses on bottlenecks in the production process
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