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15 Cards in this Set

  • Front
  • Back
Break-even point:
the level of sales at which revenue equals expenses and net income is zero
Contribution margin (marginal income):
the sales price minus the variable cost per unit.
Cost behavior:
how costs are related to and affected by the activities of an organization
Cost driver:
any output measure that causes costs (that is, causes the use of costly resources).
Cost of goods sold:
the cost of the merchandise that is acquired or manufactured and resold
Cost-volume-profit (CVP) analysis:
the study of the effects of output volume on revenue (sales), expenses (costs), and net income (net profit).
Fixed cost:
a cost that is not immediately affected by changes in the cost driver level
Gross margin (gross profit):
the excess of sales over the total cost of goods sold.
Incremental effect:
the change in total results (such as revenue, expenses, or income) under a new condition in comparison with some given or known condition.
Margin of safety:
the planned unit sales less the break-even unit sales; it shows how far
sales can fall below the planned level before losses occur.
Operating leverage:
a firm’s ration of fixed to variable costs.
Relevant range:
the limit of cost-driver activity level within which a specific relationship between costs and the cost driver is valid.
Sales mix:
the relative proportions or combinations of quantities of products that constitute total sales.
Variable cost:
a cost that changes in direct proportion to changes in the cost driver level
Variable-cost ratio (variable-cost percentage):
all variable costs divided by sales