Braunz Managerial Accounting 3Rd Edition Chapter 6, 7 & 8

Front 1

Account Analysis

Back 1

A method for determining cost behavior that is based on a manager's judgement in classifying each general ledger account as a variable, fixed, or mixed cost.

Front 2

Committed fixed costs

Back 2

Fixed costs that are locked in because of previous management decisions; management has little or no control over these costs in the short run.

Front 3

Discretionary fixed costs

Back 3

Fixed costs that are a result of annual management decisions; fixed costs that are controllable in the short run.

Front 4

relevant range

Back 4

The band of volume where total fixed costs remain constant at a certain level and where the variable cost per unit remains constant at a certain level.

Front 5

margin of safety

Back 5

Excess of expected sales over breakeven sales; the drop in sales a company can absorb without incurring an operating loss.

Front 6

operating leverage factor

Back 6

At a given level of sales, the contribution margin divided by operating income; the operating leverage factor indicates the percentage change in operating income that will occur from a 1% change in sales volume.

Front 7

sensitivity analysis

Back 7

A "what-if" technique that asks what results will be if actual prices or costs change or if an underlying assumption changes.

Front 8

contribution margin ratio

Back 8

Ratio of contribution margin to sales revenue.

Front 9

sales mix

Back 9

The combination of products that make up total sales.

Front 10

price-taker

Back 10

Those companies that cannot dictate their prices but their prices are dependent on the market.

Front 11

price-setter

Back 11

Those companies that dictate the price its customers pay for goods and services.

Front 12

avoidable fixed costs

Back 12

Fixed costs that can be eliminated as a result taking a particular course of action.

Front 13

unavoidable fixed costs

Back 13

Fixed costs that will continue to be incurred even if a particular course of action is taken.

Front 14

constraints

Back 14

A factor that restricts production or sale of a product.