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 priod 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 toatal 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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Definition
| An income statement format that organizes costs by their behvior. Sosts are seperated into variable and fied categories rather than being separated according to organizational functions. |
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Definition
| The amount remaining from sales revenues 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
| A variable that responds to some causal factor; total cost is this as represented by the letter Y, in the equation Y=a+bX |
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| Discretionary Fixed Costs |
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Definition
| Those 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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Term
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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 of separating a mixed cost into its fixed and variable elements by analyzing the change in cost between the high and low activity levels. |
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Term
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Definition
| A variable that acts as a causal factor; activity is this as represented by the 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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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
| A cost that contains both variable and fixed cost elements. |
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Definition
| An analytical method required when variations in a dependent variable are caused by more than one factor. |
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Term
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Definition
| A measure of goodness of fit in least-square 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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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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Definition
| Direct Labor cost plus Manufacturing Overhead Cost. |
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Term
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Definition
| The product of the number of partially completed units and their percentage of completion with respect to a particular cost. These are the number of complete whoe units that could be obtained from the materials and effort contained in partially completed units. |
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Term
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Definition
| A process costing method in which equivalent units and unit costs relate only to work done during the current period. |
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Term
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Definition
| A costing method used when essentially homogeneous products are produced on a continuous basis. |
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Term
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Definition
| A process costing method that blends together units and costs from both the current and prior periods. |
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Term
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Definition
| The level of sales at which profit is zero. |
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Term
| Contribution Margin Ratio (Cm ratio) |
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Definition
| A ratio computed by dividing contribution margin by dollar sales. |
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Term
| Cost-Volume Profit(CVP) Graph |
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Definition
| A graphical representation of the relationships between an organization's revenues, costs, and profits on the one hand and its sales volume on the other hand. |
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Term
| Degree of Operating Leverage |
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Definition
| A measure, at a given level of sales, of how a percentage change in sales will affect profits. The degree of operating leverage is computed by dividing contribution margin by net operating income. |
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Term
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Definition
| An analytical approach that focuses only on those costs and revenues that change as a result of a decision. |
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Term
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Definition
| The excess of budgeted (or actual) dollar sales over the break-even dollar sales. |
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Term
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Definition
| A measure of how sensitive net operating income is to a given percentage change in dollar sales. |
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Definition
| The relative proportions in which a company's products are sold. Sales mix is computed by expressing the sales of each product as a percentage of total sales. |
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Definition
| Estimating what sales volume is needed to achieve a specific target profit. |
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Term
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Definition
| A ratio computed by dividing variable expenses by dollar sales. |
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