11 mod Flashcards
mixed cost-
fixed cost -
variable cost -
- fixed and variable change
- total cost does not change
- per cost unit does not change
alternative measure - base measure / base measure =
% change
Condition in which a % change in revenue produces a larger % change in net income.
Operating leverage
Difference between a company’s sales revenue - total variable cost
Contribution margin
range of activity over which the definitions of fixed and variable costs are valid
Relevant range
factor that causes changes in variable cost
activity base
contribution margin / net income x %change =
the magnitude of operating leverage
Point where total revenue equals total cost. or profit = 0
Break-even point
cost-volume-profit analysis technique that uses the algebraic relationship among sales, variable costs, fixed costs, and desired net income before taxes to solve fore required sales volume
Equation method
sales - variable costs - fixed costs =
Profit (net income)
the sales price per unit - VC per unit
Contribution margin per unit
fixed cost / Contribution margin per unit =
break-even point in units
fixed costs + desired profit
/ Contribution margin per unit
Sales volume in units
Difference between break-even sales - budgeted sales(in units, dollars ,or %)
Margin of safety
budgeted sales(in units, dollars ,or %) - break-even sales
/ budgeted sales
Margin of safety %
