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23 Cards in this Set

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The contribution margin represented as a percentage of sales.
Contribution margin ratio.
CM ratio equation
CM ratio = Contribution Margin divided by SALES.
Break even point equation using contribution margin method.
Break even point in units sold = Fixed expenses Divided by unit contribution margin.
target profit equation
fixed expenses + target profit DIVIDED by unit contribution margin = unit sales to attain the target profit.
the excess of budgeted sales dollars over the break even volume of sales dollars.
margin of safety
margin of safety equation
total budgeted sales-break even sales.
margin of safety percentage equation.
margin of safety in dollars DIVIDED by total budgeted sales in dollars.
a measure of how sensitive net operating income is to a given percentage change in dollar sales.
operating leverage
degree of operating leverage equation.
Contribution margin DIVIDED by net operating income
treats all manufacturing costs as product costs, regardless of whether they are variable or fixed.
absorption costing
only those manufacturing costs that vary with output are treated as product costs.
variable costing
under absorption costing which items are considered product costs.
direct materials, direct labor, variable manufacturing overhead, and fixed manufacturing overhead.
under variable costing which items are considered product costs.
direct materials, direct labor, variable manufacturing overhead
under absorption costing fixed manufacturing is a ----- cost and under variable costing it is a -------- cost
product, period
variable and fixed selling and administrative expenses are always------
period costs.
involves developing goals and preparing various budgets to achieve those goals
planning
involves the steps taken by management to increase the likelihood that all parts of the organization are working together to achieve the goals set down at the planning stage
control
a manager should be held responsible for those items and only those items that the manager can actually control to a significant extent.
responsibility accounting
a self imposed budget is also called a
participative budget
a budget that is prepared with the full cooperation and participation of managers at all levels
self imposed budget
consists of a number of separate but interdependent budgets.
master budget
When variable costing net operating income exceeds absorption costing net operating income then----?
sales exceeds production
If production is greater than sales which costing method will have a higher income
absorption