Term
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Definition
| The point at which total revenues equal total costs, so that operating profit is zero |
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Term
contribution income statement
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Definition
| In a contribution income statement variable costs are subtracted from sales to get total contribution margin, from which fixed costs are subtracted, to yield the amount of operating profit for the period |
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Term
contribution margin per unit
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Definition
| The difference between the selling price per unit (<em>p</em>) and the variable cost per unit (<em>v</em>); it is a measure of the change in operating profit for each unit change in sales |
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Term
| contribution margin ratio |
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Definition
| The ratio of the contribution margin per unit to the selling price per unit, (p-v)/p |
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Term
| cost-volume-profit (CVP) analysis |
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Definition
| A short-term profit-planning model; that is, a method for analyzing how various operating decisions and marketing decisions will affect short-term profit |
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Term
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Definition
| A diagrammatic representation (expressed in units) of how revenues and total costs change over different levels of sales volume |
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Term
degree of operating leverage (DOL)
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Definition
| A measure, at any level of sales volume, of the sensitivity of operating profit to changes in volume; defined as the ratio of contribution margin to operating profit at any output level, |
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Term
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Definition
| The amount of planned (or actual) sales above the breakeven point |
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Term
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Definition
| The amount of planned (or actual) sales above the breakeven point |
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Term
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Definition
| The extent of fixed costs in an organization’s cost structure |
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Term
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Definition
| Illustrates how the level of operating profit changes over different levels of sales volume |
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Term
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Definition
| The relative proportion in which a company’s products (or services) are sold |
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Term
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Definition
| The name for a variety of methods that examine how an amount changes if factors involved in predicting that amount change |
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Term
| total contribution margin |
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Definition
| The contribution margin per unit (p-v) multiplied by the number of units sold, Q |
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Term
weighted-average contribution margin per unit
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Definition
| An average per-unit contribution margin based on an assumed sales mix determined on the basis of physical units (not sales dollars) |
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Term
| weighted-average contribution margin ratio |
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Definition
| An average contribution margin ratio for a given sales mix based on sales dollars (not units) |
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Term
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Definition
| The calculation of an amount given different levels of a factor that influences that amount |
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