9/30 Class Test Flashcards

1
Q

cost driver formula

A

y= fixed costs + variable costs

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2
Q

x-axis

A

activity or dependent variable

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3
Q

y-axis

A

cost

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4
Q

income statements traditional

A

sales

GM

NI

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5
Q

contribution margin income statements

A

sales

CM

NI

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6
Q

breakeven point

A

where the net income is 0

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7
Q

margin of safety

A

area where we have covered our costs and we are making profit

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8
Q

sales equation

A

VC + FC + Profit

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9
Q

profits

A

sales - VC - FC

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10
Q

operating income equation

A

net income/(1-tax rate)

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11
Q

margin of safety

A

total sales - break even sales

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12
Q

degree of operating leverage

A

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)

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13
Q

steps for high low method

A

high cost - low cost/high activity - low activity

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14
Q

exam

A

30% short answer
30% multiple choice
40% long answer/problems

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