Fichas
Chapter 9 Key Terms
Fichas del conjunto (10)
- 1Break-even chartA graph that depicts the relationships among revenues, variable costs, fixed costs, and profits (or losses)
- 2Break-even point (BEP)The level of activity, in units or dollars, at which total revenues equal total costs
- 3Contribution margin ratio (CM%)The proportion of each revenue dollar remaining after variable costs have been covered; computed as contribution margin divided by selling price (per unit or in total)
- 4Cost-volume-profit (CVP) analysisA procedure that examines the relationship among costs (both fixed and variable), sales volume, and profits (either before- or after-tax)
- 5Degree of operating leverage (DOL)A factor that indicates how a percentage change in sales, from the existing or current level, will affect company profits; calculated as (contribution margin divided by net income); equal to (1 divided by margin of safety percentage)
- 6Incremental analysisA process of evaluating changes that focuses only on the factors that differ from one course of action or decision to another
- 7Margin of safety (MS)The excess of a company's budgeted or actual sales over its break-even point; can be calculated in units or dollars or as a percentage; is equal to (1 divided by degree of operating leverage)
- 8Operating leverageThe proportionate relationship between a company's variable and fixed costs; reflects the cost structure
- 9Profit-volume (PV) graphA visual representation of the amount of profit or loss associated with each level of sales
- 10Variable-cost ratio (VC%)The proportion of each revenue dollar represented by variable costs; computed as variable costs divided by sales or as (1-contribution margin ratio)