Chapter 3 Cost Accounting

Front 1

Contribution Margin

Back 1

Revenues minus Variable Expenses

Front 2

Contribution Margin Per Unit

Back 2

Total Revenue - Total Variable Expenses / units sold

Front 3

Contribution Margin Percentage

Back 3

Contribution Margin/Revenues

expressing the contribution margin as a percent rather than per unit or a dollar amount

Front 4

Breakeven Point

Back 4

Is that quantity of output sold at which total revenues equal total costs( variable and fixed)---that is, the quantity of output sold that results in $0 of operating income.

Front 5

Choice Criterion

Back 5

Is an objective that can be quantified, such as maximize income or minimize costs

Front 6

Cost Volume Profit Analyses

Back 6

To study the behavior of and relationship among these elements as changes occur in the number of units sold, the selling price, the variable cost per unit, or the fixed costs of a product.

Front 7

Contribution Margin Income statement

Back 7

Groups costs into variable costs and fixed costs to highlight contribution margin

Front 8

Net Income

Back 8

=Operating income-Income Taxes

Is operating income plus nonoperating revenues (such as interest revenue) minus nonoperating costs (such as interest cost) minus income taxes

Front 9

Margin of saftey

Back 9

Budgeted Sales - Break Even Revenues

How far can revenues fall before the company will begin to lose money

Front 10

Operating Leverage

Back 10

Contribution Margin/Net operating profit

Describes the effects that fixed costs have on changes in operating income as changes occur in units sold and contribution margin.

Front 11

Gross Margin Percentage

Back 11

Is the gross margin divided by revenues

Is the gross margin divided by revenues

Front 12

Decision Table

Back 12

Is a summary of the alternative actions, events, outcomes, and probabilities of events

Front 13

Outcomes

Back 13

Specify, in terms of the choice criterion, the predicted economic results of the various possible combinations of actions and events.

Front 14

expected Monetary Value.

Back 14

When the outcomes are measured in monetary terms

Front 15

Expected Value

Back 15

Is the weighted average of the outcomes, with the probability of each outcome serving as the weight.

Front 16

Probability

Back 16

Is the likelihood or chance that an event will occur.

Front 17

Probability Distribution

Back 17

Describes the likelihood, or the probability, that each of the mutually exclusive and collectively exhaustive set of events will occur.

Front 18

Sales Mix

Back 18

Is the quantities ( or proportion) of various products (or services) that constitute a company's total unit sales.

Front 19

PV graph

Back 19

Shows how changes in the quantity of units sold affect operating income

Front 20

Revenue Driver

Back 20

Is a variable, such as volume, that casually affects revenues.

Front 21

Sensitivity Analysis

Back 21

Is a what-if technique managers use to examine how an outcome will change if the original predicted data are not achieved or if an underlying assumption changes.

Front 22

Uncertainty

Back 22

Which is the possibility that an actual amount will deviate from an expected amount.

Front 23

Break Even in units

Back 23

Fixed Costs/ C.M. per unit

Front 24

Break even in revenue

Back 24

Fixed Costs/ C.M. %

Front 25

Contribution Margin

Back 25

Contribution Margin / Revenues

how much is left to cover fixed costs