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Details Title: Intro to Management Accounting Description: Chapter 2 Total Flash Cards: 15 Created: 09/17/2007 13:16:36	To study from this set of flash cards, or to create your own your own study flash cards, register HERE. If you are already a registered user, CLICK HERE.
Cards Term cost behavior Definition how costs are related to and affected by the activities of an organization Term cost driver Definition any output measure that causes cost [that is, causes the use of costly resources] Term variable cost Definition a cost that changes in direct proportion to changes in the cost driver level Term fixed cost Definition a cost that is not immediately affected by changes in the cost driver level Term relevant range Definition the limit of cost-driver activity level within which a specific relationship between costs and the cost driver is valid. Term cost-volume-profit [CVP] analysis Definition the study of the effects of output volume on revenue [sales], expenses [costs], and net income [net profit] Term break-even point Definition the level of sales at which revenue equals expenses and net income is zero Term margin of safety Definition the planned unit sales less the break-even unit sales; it shows how far saels can fall below the planned level before losses occur Term contribution margin [marginal income] Definition the sales price minus the variable cost per unit Term sales mix Definition the relative proportions or combinations of quantities of products that constitute total sales. Term incremental effect Definition the change in total results [such as revenue, expenses, or income] under a new condition in comparison with some given or known condition Term operating leverage Definition a firm's ratio of fixed to variable costs Term variable-cost ratio [variable-cost percentage] Definition all variable cost divided by sales Term gross margin [gross profit] Definition the excess of sales over the total cost of goods sold Term cost of goods sold Definition the cost of the merchandise that is acquired or manufactured and resold