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9 Cards in this Set
- Front
- Back
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Break-Even Point
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the level of sales at which profit is zero
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Contribution Margin Ratio
(CM Ratio) |
ratio computed by dividing contribution margin by dollar sales
or Unit CM divided by Unit selling price |
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Degree of Operating Leverage
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a measure, at a given level of sales, of how a percentage change in sales will affect profits. The degree of operating leverage is computed by dividing contribution margin by net operating income.
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Incremental Analysis
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an analytical approach that focuses only on those costs and revenues that change as a result of a decison
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Margin of Safety
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the excess of budgeted (or actual) dallar sales over the break even dollar sales
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Operating Leverage
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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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Sales Mix
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the relative proportions in which a company's products are sold. Sales mix is computed by expressing the sales of each product as a percentage of total sales
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Target Profit Analysis
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estimating what sales volume is needed to achieve a specific target profit.
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Variable Expense Ratio
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a ratio computed by dividing variable expenses by dollar sales
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