Managerial Accounting Chapter 6

Front 1

break even point

Back 1

the level of sales at which profit is zero. point wehre total contributio margin equals total fixed expenses

Front 2

contriutiom margin method

Back 2

a method of computing the break even point in which the fixed expenses are divided by the contributio margin per unit

Front 3

contributiom margin ratio

Back 3

the contributiom margin as a percentage of total sales( TOTAL CM / TOTAL SALES)

Front 4

cost volume profit graph

Back 4

the relationships between an organizations revenues and costs on the one hand and its sales volume on the other hand presented in graphic form

Front 5

degree of operating leverage

Back 5

a measure at a given lvel of sales of how a percentage in slaes voluem will affect profits. The degree of operating leverage ic opmuterd by dividing contributiom margin by net operatin income

Front 6

equation method

Back 6

a method od coputing the break even point athat relies on the equation Sales= variable expenses + fixed expenses + Profits

Front 7

incremental analysis

Back 7

an analytcal approach that focuses only on teh costs and revenues that change as a result of a decision

Front 8

margin of safety

Back 8

the excess of budgeted or actual dollar sales over the break even volume of dollar sales

Front 9

operating leverage

Back 9

a measure of how sensitiive net operating income is to a given percentage change in sales. It is computed by dividing the contribution margin by net operating income

Front 10

sales mix

Back 10

the relative proportions in whcih a company's products are sold. Sales mix is computed by expressing the sales of each product as a percentage of total sales

Front 11

Unit CM Ratio

Back 11

UNIT CM / UNIT SELLING PRICE

Front 12

Break even point in units sold

Back 12

fixed expenses / unit contribution margin

Front 13

break even point in total sales dollars

Back 13

fixed expenses / cm ratio

Front 14

Target Profit Ratio Units

Back 14

Fixed expenses + target profit/ unit CM

Front 15

Target Profit Sales

Back 15

Fixed Expenses+ Target Profit/ CM Ratio