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19 Cards in this Set

  • Front
  • Back
cost driver
any output measure that causes cost
variable cost
changes in direct proportion to changes in cost-driver level. e.g. 10% increase in units of production would produce 10% increase in variable cost.
fixed cost
not afected by changes in cost-driver level
cost-volume-profit analysis
break-even point
level of sales at which revenue equals expenses and net income is zero
marginal income/ unit contribution margin
unit sales price minus variable cost per unit
total contribution margin
total number of units sold x unit contribution margin
variable-cost %
total variable cost/total sales
contribution-margin %
total contr. margin/total sales=100% - variable cost %
incremental effect
change in total results under new condition
operating leverage
ratio of fixed to variable costs
margin of safety
shows how far sales can fall below planned level before losses occur. planned saled- break-even unit sales
gross margin/ gross profit
excess of sales over COGS. sales price-COGS
line of credit
informal agreement with a bank where bank agrees to lend firm up to predetermined amount
net cash outflow
disbursements greater than receipts
inventory equation
beginning balance + additions (labor, purchases, depreciation) - COGS
taxes payable equation
beginning balance + taxes - tax payments per the cash budget
retained earnings equation
beg. balance + net income - dividends
cash flow from working capital equation
change in current liabilities - change in current assets