midterm Flashcards
is a cost whose total dollar
amount varies in direct proportion to
changes in the activity level.
variable cost
cost remains constant if
expressed on a per unit basis.
variable cost per unit
Direct materials is a ______because the amount used during a period will vary in direct proportion to the
level of production activity.
true variable cost
A resource that is obtainable only in large
chunks (such as maintenance workers) and
whose costs increase or decrease only in
response to fairly wide changes in activity.
Step-Variable Costs
is a cost whose total dollar amount
remains constant as the activity level changes.
fixed cost
cost decrease
as the activity level increases.
fixed cost per unit
has both fixed and variable
components.
mixed cost
is the amount
remaining from sales revenue after variable
expenses have been deducted.
Contribution Margin (CM)
total cm over total sales
CM ratio
the excess of
budgeted (or actual) sales over the
break-even volume of sales.
margin of safety
refers to the relative proportion
of fixed and variable costs in an organization.
Cost structure
A measure of how sensitive net operating
income is to percentage changes in sales.
Operating Leverage
designed to
provide more accurate
ways of assigning indirect
and support service costs
to activities, processes,
products, customers
activity based costing
is a “bucket” in which costs
are accumulated that relate
to a single activity measure
in the ABC system.
Activity Cost Pool
Simple count
of the number
of
times an
activity
occurs.
Transaction
driver
