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16 Cards in this Set
- Front
- Back
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Sunk Costs
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Costs that are unavoidable because they have already occurred and cannot be recovered. Not a relevant cost.
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Incremental Costs
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The additional costs incurred to produce an additional amount of the unit over the present output.
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Controllable Costs
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Costs that can be authorized at a specific level of management.
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Uncontrollable Costs
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Costs that were authorized at a different level. Not a relevant cost because they cannot be changed.
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Marginal Costs
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Cost for a one-unit increase in activity. These include all variable costs and any avoidable fixed costs associated with decision.
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Margin of Safety
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"cushion" The excess of sales over break even sales. Expressed in $$$ or as a %.
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Calculate Breakeven Sales
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Fixed costs / (CM / Sales)
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Calculate Margin of Safety
& Margin of Safey % |
1. Total sales - Breakeven sales
2. Margin of Safety in $ / Total Sales |
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Contribution Margin
Contribution Margin % (ratio) |
1. Break even sales X CM ratio
2. CM / Total Sales |
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Calculate Stockholder's Equity
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Total Assets - Liabilities
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Calculate Current Ratio
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Current Assets / Current Liabilities
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Calculate Return on Stockholder's Equity
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Net Income / Stockholder's Equity
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Calculate Breakeven point in $$$
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Total fixed costs / CM ratio
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Regression Analysis
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A method for studying the relationship between 2 or more variables. Predicts the value of dependent variable corresponding to given values of the independent variables (ie fixed cost, variable cost/unit). More accurate than high-low method
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High-Low Method
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Technique used to estimate the fixed and variable portions of cost, usually production costs. Used for flexible/performance budgets
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Learning Curve
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Step-by-step method of projecting costs when learning is a variable, often for repititve task. The rate is a percentage of the decrease in avg time (or total) as production doubles.
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