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35 Cards in this Set

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