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15 Cards in this Set
- Front
- Back
break even point
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the level of sales at which profit is zero. point wehre total contributio margin equals total fixed expenses
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contriutiom margin method
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a method of computing the break even point in which the fixed expenses are divided by the contributio margin per unit
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contributiom margin ratio
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the contributiom margin as a percentage of total sales( TOTAL CM / TOTAL SALES)
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cost volume profit graph
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the relationships between an organizations revenues and costs on the one hand and its sales volume on the other hand presented in graphic form
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degree of operating leverage
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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
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equation method
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a method od coputing the break even point athat relies on the equation Sales= variable expenses + fixed expenses + Profits
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incremental analysis
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an analytcal approach that focuses only on teh costs and revenues that change as a result of a decision
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margin of safety
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the excess of budgeted or actual dollar sales over the break even volume of dollar sales
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operating leverage
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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
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sales mix
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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
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Unit CM Ratio
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UNIT CM / UNIT SELLING PRICE
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Break even point in units sold
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fixed expenses / unit contribution margin
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break even point in total sales dollars
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fixed expenses / cm ratio
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Target Profit Ratio Units
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Fixed expenses + target profit/ unit CM
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Target Profit Sales
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Fixed Expenses+ Target Profit/ CM Ratio
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