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Definition
| the way costs respond to changes in volume or activity |
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| total costs that change in direct proportion to changes in productive output or any other measure of volume. |
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The point at which total revenues equal total costs. |
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| The amount that remains after all variable costs are substracted from sales. |
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Cost-volume-profit (CVP) analysis |
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Definition
| An examination of the cost behavior patterns that underlie the relationships among cost, volume of output, and profit. |
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| A method that separates costs into their fixed and variable components by performing a step-by-step analysis of the tasks, costs, and processes involved in completing an activity or product. |
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| Total costs that remain constant within a relevant range of volume or activity. |
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| A three-step approach to separating a mixed cost into its variable and fixed components. |
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| The number of sales units or amount of sales dollars by which actual sales can fall below planned sales without resulting in a loss. |
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| costs that have both variable and fixed |
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What is a realistic measure of what an organization is likely to do? |
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| The upper limit of an organization's productive output capability, given its existing resources. |
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| Theoretical capacity reduced by normal and expected work stoppages. |
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| A mathematical approach to separating a mixed cost into its variable and fixed components. |
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| The span of activity in which a company expects to operate. |
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The proportion of each product's unit sales relative to the company's total unit sales. |
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| A chart of plotted points that helps determine whethera linear relationship exists between a cost item and its related activity measure. |
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| Theoretical (ideal) capacity |
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Definition
| The maximum productive output for a given period in which all machinery and equipment are operating at optimum speed, without interruption. |
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Definition
| Total costs that change in direct proportion to changes in productive output or any other measure of volume. |
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Term
| Which of the following statements contradict the philosophy underlying the just-in-time operating environment? |
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Definition
| Large inventories are maintained in order to fulfill customer orders on a timely basis. |
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Which of the following statements most accurately explains the behavior of costs? |
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Definition
| There is no norm; rather, costs can be fixed, variable, or a combination of both. |
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| Which of the following statement is true regarding fixed and variable costs? |
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Definition
Fixed costs are constant in total, and variable costs are constant per unit. |
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Calculate the variable cost per activity base. month Activity level Highest D. 200 $2000 Lowest A. 100 1000 |
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Definition
100 1000 1000/100=$10 per Machine hour |
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Calculate the total fixed costs highest 2000 - (2000 x $10) |
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Total ficed costs =Total costs - total variable costs = -18000 |
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What is the equation for CVP? |
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| How do you solve for the break even point? |
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Units produced and sold Sales revenue less VC = Contribution Margin less FC =Profit |
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express the breakeven point formula |
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| What is targeted sales units formula? |
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| What is the targeted sales units? |
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