Chapter 4 Vocab Flashcards
A cost that varies with the number of batches regardless of how many units are in each batch
Batch-related cost
The point where the total cost line intersects the total revenue line
Breakeven point
Total sales less total variable costs at a given level of activity
Contribution margin
The study of how costs and profits change in response to changes in the volume of goods or services provided to customers
Cost-volume-profit analysis
The cost of a long-term asset spread over the period the assets are used
Depreciation
The cost of employees who manufacture the products
Direct labor
The cost of the materials that are directly traceable to the product and that are costly enough to warrant tracing them
Direct materials
A cost incurred to maintain the company’s capacity to operate
Facility-sustaining cost
The additional cost associated with an alternative
Incremental cost
The difference between the incremental revenues and incremental costs of a particular alternative
Incremental profit
The additional revenue associated with an alternative
Incremental revenue
The cost of production employees who do not physically manufacture the product
Indirect labor
The cost of production materials that either cannot be traced to the product or whose cost is not enough to warrant tracing
Indirect materials
All costs other than direct materials and direct labor that are incurred to manufacture products
Manufacturing overhead
A cost that is related to selling the products and services or administering the company
nonproductive cost
A benefit forgone when choosing one alternative over another
Opportunity cost
A cost that is incurred to obtain or manufacture a product
Product cost
A cost that varies with the number of product lines
Product-sustaining cost
A cost or revenue that will occur in the future and that differs among the alternatives considered
Relevant variable
The relative proportions of units of products sold in a multi-product company
Sales mix
The process if changing key variables n CVP analysis to determine how sensitive the CVP relationships are to changes
Sensitivity analysis
A past cost; therefore, never relevant in short-term operating decisions
Sunk cost
A cost that varies with the number of units
Unit-related cost
