Flashcards

Ch 5

Juvenal Jaimes Accounting 211 211 English 5.0Average rating 5.0 out of 5 (1 rating) 10 cards

Cards in this deck (10)

1What is a break-even point?The level of sales at which profit is zero.
2What is the contribution margin ratio (CM ratio)?A ratio computed by dividing contribution margin by dollar sales.
3What is a cost-volume-profit (CVP) graph?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.
4What's a degree of operatating leverage?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.
5What is incremental analysis?Any analytical approach that focuses only on those costs and revenues that change as a result of decision.
6What is a margin of safety?The excess of budgeted or actual dollar sales over the break-even dollar sales.
7What is operating leverage?A measure of how sensitive net operating income is to a given percentage change in dollar sales.
8What is sales mix?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.
9What is a target profit analysis?Estimating what sales volume is needed to achieve a specific target profit.
10What is a variable expense ratio?A ratio computed by dividing variable expenses by dollar sales.