Term
| Contribution Margin Ratio= |
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Definition
| =Contribution Margin / Sales |
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Term
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Definition
| the ratio of variable expenses to sales |
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Term
| Dollar sales to attain a target profit |
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Definition
| (Target Profit + Fixed Expenses) / CM Ratio |
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Term
| Unit Sales to break even = |
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Definition
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Term
| Unit Sales to attain the target profit |
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Definition
| (Target Profit + Fixed Expenses) / Unit CM |
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Definition
| =total sales / break even |
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Term
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Term
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Definition
| a method for analyzing cost behavior in which an account is classified as either variable or fixed based on the analyst's prior knowledge of how the cost in the account behaves. |
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Term
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Definition
| a measure of whatever causes the incurrence of a variable cost. For example, the total cost of X-Ray film in a hospital will increase as the number of x-rays taken increases. Therefore the number of x-rays is the activity base that explains the total cost of x-ray film. |
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Definition
| Investments in facilities, equipment, and basic organizational structure that can't be significantly reduced even for short periods of time without making fundamental changes. |
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Term
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Definition
| An income statement format that organizes costs by their behavior. Costs are separated into variable and fixed categories rather than being separated according to organizational functions. |
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Definition
| the amount remaining from sales revenue after all variable expenses have been deducted. |
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Definition
| the relative proportion of fixed, variable, and mixed costs in an organization. |
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Term
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Definition
| respond to some casual factor; total cost is the dependent variable as represented by the letter Y, in the equation Y=a+bx |
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Definition
| fixed costs that arise from annual decisions by management to spend on certain fixed cost items, such as advertising and research. |
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Definition
| a detailed analysis of cost behavior based on an industrial engineer's evaluation of the inputs that are required to carry out a particular activity and of the prices of those inputs. |
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Definition
| a method separating a mixed cost into its fixed and variable elements by fitting a regression line that minimizes the sum of the squared errors. |
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Definition
| acts as a casual factor, activity is the independent variable, as represented by letter X, in the equation Y=a+bx |
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Term
| Least Squares Regression Method |
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Definition
| a method of separating a mixed cost into its fixed and variable elements by fitting a regression line that minimizes the sum of the squared errors |
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Term
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Definition
| Cost behavior is said to be linear whenever a straight line is a reasonable approximation for the relation between cost and activity. |
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Definition
| contains both variable and fixed cost elements |
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Definition
| an analytical method required when variations in a dependent variable are caused more than one factor. |
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Term
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Definition
| A measure of goodness of fit in least-squares regression analysis. It is the percentage of the variation in the dependent variable that is explained by variation in the independent variable. |
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Term
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Definition
| The range of activity within which assumptions about variable and fixed cost behavior are reasonably valid. |
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Term
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Definition
| the cost of a resource that is obtained in large chunks and that increases and decreases only in response to fairly wide changes in activity. |
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