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16 Cards in this Set
- Front
- Back
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Point at which total revenue equals total cost |
Break-even point |
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Fixed expenses that cannot be traced to individual segments or products; will continue if one part is eliminated |
Common fixed expenses |
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Diff between total sales and total variable costs on a total basis (price minus unit variable on a per-unit basis); represents amt left from sales to contribute to cover fixed costs and profit |
Contribution margin |
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Cost behavior-based inc stmt; costs are sep into fixed and variable cats; sales - tvc = TCM - tfc = Oper Inc |
CM Inc stmt |
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Ratio of TCM to sales or of unit contrib to price; also computes as 1-variab cost ratio |
Contribution margin ratio |
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Company’s relative mix of fixed to variable costs; useful to determine oper leverage |
Cost structure |
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Estimates how changes in V & F costs, sales vol, & price affect profit |
CVP analysis |
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Graph shows relation among cost, vol & profit, using tot cost line & tot rev line; intersect is break-even point |
CVP graph |
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Shows degree to which fixed costs are used to obtain higher percent change in profit as sales change; equals TCM/oper inc |
Degree of operating leverage |
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Fixed costs that are directly traced to given segment and disappear if segment is elimin |
Direct fixed expenses |
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Point at which 2 diff oper systems produce same income |
Indifference point |
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# of units sold or amount of sales rev earned above BE pt |
Margin of safety |
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This occurs when fixed costs are used to obtain higher change in profits as sales change |
Operating leverage |
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Relative combo of products sold by a company; usually expressed in lowest whole units; ie 3:2 indicates for every 3 A units sold, 2 units of B are sold |
Sales mix |
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A “what-if” technique used to see what impact a change in underlying variable has on the result |
Sensitivity analysis |
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Ratio of tot VC to sales or of unit VC to price; also computed as 1-CMRatio, it reps the percent of each sales dollar used to cover VC |
Variable cost ratio |
