Term

Definition
a cost that results from an organization's ownership or use of facilities and its basic organization structure 


Term

Definition
A cost that results from a discretionary management decision to spend a particular amount of money. (i.e. charity, advertisements, worker training) 


Term

Definition
sales  full cost of goods (fixed AND variable)
NOTE: this will not be included on a Contribution Margin income statement 


Term
How do you calculate COST PER UNIT? 

Definition


Term
How do you calculate VARIABLE COST PER UNIT? 

Definition
Variable cost per unit = Total Variable Costs/Units 


Term
How do you calculate TOTAL VARIABLE COSTS? 

Definition
Total variable costs = Variable cost per unit x # of units 


Term
How do you calculate FIXED COST PER UNIT? 

Definition
Total Fixed Cost/Volume = Fixed cost per unit 


Term
What happens to Fixed Cost per Unit as volume Increases? 

Definition


Term
How do you calculate TOTAL COST? 

Definition
Total cost = Total Fixed + Total Variable 


Term
In finding the Contribution Margin, What factors do you need to consider? 

Definition
Price  Variable Cost = CM *Use units and Total 


Term
Does variable costs per unit change? 

Definition


Term
How do you calculate TOTAL FIXED COSTS? 

Definition
Total Fixed costs = (units produced x FC per unit) / Units produced 


Term
What is the formula for the "HighLow method"? 

Definition
1)Variable cost per unit = ($ for high  $ for low)/(High volume  Low volume)
2)Total cost = Fixed cost + VC per unit(#unit)
3)Total Cost = Fixed cost + Variable(x units)
NOTE: Use the HIGH point for Total cost in step 2 


Term
What are the 5 cost estimate problems? 

Definition
1. Data may be missing 2. Outliers 3. Mismatched time periods 4. fixed costs may appear to be variable due to allocation 5. inflation 


Term
How do you find the COST EQUATION? 

Definition
It is the 3rd step in the "highlow" method. 


Term
What are three methods used to separate mixed cost into the fixed and variable components?
Which is most accurate? 

Definition
1. HighLow 2. Visual Fit 3. Least squares regression* most accurate 


Term
How do you calculate the CONTRIBUTION MARGIN? 

Definition
Contribution margin = Sales  Variable cost 


Term
How do you calculate NET INCOME? 

Definition
Net income = Contribution  Fixed 


Term
How do you calculate the BREAKEVEN POINT IN UNITS? 

Definition
UNITS = (Total Fixed + Net income) / (Price unit  Variable Cost per unit) 


Term
How do you calculate BREAK EVEN POINT IN SALES DOLLARS? 

Definition
Break even point ($) = BE point in Units x price unit 


Term
What is the Degree of Operating Leverage? 

Definition
Dollar = (Total Sales  Total Variable Cost) / (Total Sales  Total Variable Cost  Total Cost) 


Term
How do you calculate the Margin of Safety? 

Definition
Current volume  Break even volume = Margin of Safety 


Term
How do you calculate the Margin of Safety? 

Definition
Current volume  Break even volume = Margin of Safety 


Term
How do you calculate PRODUCTION UNITS? 

Definition
Production units = Sales units  begin + end 

