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22 Cards in this Set

  • Front
  • Back
cost behavior analysis
study of how specific costs respond to changes in the level of business activity
relevant range
range over which a firm finds it practical to operate in the short run
activity base/cost driver
activity which causes costs to change
high low method
var cost per unit =

change in total cost divided by change in activity level
cost volume profit analysis (CVP)
study of the effects of changes in costs and volume on a company's profits
total contribution margin
total sales - total VC
contribution margin per unit
unit selling price - VC/unit
contribution margin ratio
CM/unit / unit sales price
traditional income statement
=gross margin
-operating expenses
CM income statement
margin of safety
difference between actual or expected sales and sales at break even point
margin of safety ratio
margin of safety/actual sales
steps in decision making
-identify problem and assign responsibility
-determine and evaluate courses of action
-make a decision
-evaluate decision
relevant costs
future costs that differ among the alternatives
sunk cost
a cost that has already been incurred- cannot be changed
incremental R/C
total difference in R/C among two alternatives
allocate limited resources
find CM/unit of limited resource
absorption costing
accumulate all product costs with inventory
variable costing
accumulate only variable product costs with inventory
breakeven in units=
total fixed costs divided by CM/unit
cost structure
proportion of fixed to variable costs
degree of operating leverage=