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