9/30 Class Test Flashcards
cost driver formula
y= fixed costs + variable costs
x-axis
activity or dependent variable
y-axis
cost
income statements traditional
sales
GM
NI
contribution margin income statements
sales
CM
NI
breakeven point
where the net income is 0
margin of safety
area where we have covered our costs and we are making profit
sales equation
VC + FC + Profit
profits
sales - VC - FC
operating income equation
net income/(1-tax rate)
margin of safety
total sales - break even sales
degree of operating leverage
CM/Net Operating Income
this tells us that by whatever percentage our sales increase our income will increase by x times that (x = degree of OL)
steps for high low method
high cost - low cost/high activity - low activity
exam
30% short answer
30% multiple choice
40% long answer/problems