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18 Cards in this Set
- Front
- Back
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Breakeven point
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The point at which total revenues equal total costs.
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Contribution margin (CM)
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The amount that remains after all variable costs are subtracted from sales.
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Cost behavior
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The way costs respond to changes in volume or activity
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Cost-volume-profit (C-V-P) analysis
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An examination of the cost behavior patterns that underlie the relationships among cost, volume of output, and profit.
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Engineering method
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A method that separates costs into their fixed and variable components by performing a step-by-step analysis of the tasks, costs, and processes involved in completing an activity or product.
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Fixed costs
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Total costs that remain constant within a relevant range of volume or activity.
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High-low method
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A three-step approach to separating a mixed cost into its variable and fixed components.
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Margin of safety
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The number of sales units or amount of sales dollars by which actual sales can fall below planned sales without resulting in a loss.
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Mixed costs
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Cost that have both variable and fixed components.
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Normal capacity
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The average annual level of operating capacity needed to meet expected sales demand.
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Operating capacity
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The upper limit of an organization's productive output capability, given its existing resources.
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Practical capacity
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Theoretical capacity reduced by normal and expected work stoppages.
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Regression analysis
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A mathematical approach to separating a mixed cost into its variable and fixed components.
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Relevant range
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The span of activity in which a company expects to operate.
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Sales mix
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The proportion of each product's unit sale relative to the company's total unit sales.
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Scatter diagram
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A chart of plotted points that determine whether a linear relatioship exists between a cost item and its related activity measure.
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Theoretical (ideal) capacity
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The maximum productive output for a given period in which all machinery and equipment are operating at optimum speed, without interruption.
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Variable costs
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Total costs that change in direct proportion to changes in productive output or any other measure of volume.
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