22 Flashcards
Variable cost change volume
Total variable cost changes in proportion to change in volume of activity
Cost volume profit analysis
Planning method that includes predicting the volume of activity, the cost incurred, sales earned and profits received
Mixed cost
Include both fixed and variable cost components
Step wise cost
Cost that remains fixed over limited range of volumes but changes by lump sum when volume changes occur outside these limited ranges
Curvilinear cost change
Not constant rate
Cost that change with volume but not at a constant rate
Scatter diagrams
Points on diagram
Graph used to display data about past cost behavior and sales as points on a diagram
High low method highest and lowest unit volumes
Estimate the cost equation by graphically connecting the two amounts at the highest and lowest unit volumes
Contribution margin per unit
Selling price per unit minus variable cost per unit
Contribution margin ratio
Computed as contribution margin per unit divided by sales price per unit
Break even point
Sales level at which company neither earns a profit nor incurs a loss
Sales equals fixed plus variable costs
Cost volume profit chart graphic
Graphic representation of cost volume-profit relationship
Cost volume profit analysis
Planning métis that includes predicting the volume of activity, the cost incurred, sales earned, and profits received
Margin of safety over the level of break even sales
Excess of expected sales over the level of break even sales
Sales mix ratio of sales volume
The ratio of sales volumes for various products
Weighted average contribution margin %of company’s sales mix
Contribution margin for a multiproduct company computed based on each products % of company’s sales mix
