Break-even Point (Flashcards)

These costs or expenses do not change in total within a reasonable range of sales, production or other activity.

These costs or expenses will vary in total as the level of activity changes because the rate per unit is constant or fixed.

These expenses consist of both a fixed component and a variable component.

This is the result of dividing a company’s fixed expenses for a period of time by the contribution margin per unit of product.

This is the result of dividing a company’s fixed expenses for a period of time by the contribution margin ratio.

This term is associated with the revenues earned by selling products. It can be expressed as units sold X the selling price of each unit.

This term is associated with the amounts earned from sales of products and from the performance of services.

When this is multiplied times the quantity of units sold the result is the sales revenues.

This term is the expression of the quantity of a product that has been or will be sold during a period of time.

This type of analysis (which is broader than break-even analysis) examines how a company’s profit will change when there is more or less activity.

This is the result of subtracting all of the variable expenses (variable cost of goods sold, variable selling, variable administrative) from revenues.

This is the result of subtracting the per unit variable expenses (including the variable cost of goods sold, variable SG&A) from the per unit selling price.

This results from dividing the dollars of contribution margin by the dollars of revenues. It is also the per unit contribution margin divided by the per unit selling price.

This is the amount of sales above the break-even point. It is the amount by which sales could drop before the company would show a negative net income.

This refers to the proportion of various products sold or services provided. This is important because products and services often have differing levels of contribution margins.

This simple, linear technique for determining the amount of total fixed costs and the variable cost rate for mixed costs uses only two points of data.

This data point could be caused by a cost or quantity that is not in line with other observations. It is often detected by plotting or graphing all of the observations.

This is a reasonable variation in the volume or activity in which the total amount of fixed costs is expected to remain constant.

This statistical tool often uses the least-squares method for determining the best-fitting cost line for a mixed cost.

This type of regression analysis will have only one independent variable.

This is the equation of a cost line where there is only one independent variable.

This symbol in the equation of a cost line is the dependent variable such as the total cost of electricity for a month.

This symbol in the equation of a cost line is the amount of fixed cost in the time period represented by the line.

This symbol in the equation of a cost line is the variable cost per unit of the independent variable.

This symbol in the equation of a cost line is the quantity of the independent variable.

This is the term that is designated as “x” in the equation of the cost line y = a + bx. Ideally, it is the cause of the change in the dependent variable.

This is the term that is designated as “y” in the equation of the cost line y = a + bx. An example is the total of a mixed cost such as the monthly cost of electricity.

This is the result of plotting points of various observations in order to determine if they include any outliers.

This is the horizontal axis of the graph. It is used to indicate the total number of units of the independent variable in a cost line.

This is the vertical axis of the graph. It is used to indicate the total cost of the dependent variable in a cost line.

This is referred to as the rise over run. It indicates how the total cost will change when there is a change in the amount indicated by the x-axis.

This amount is the combination of the fixed costs and variable costs (including those which are part of mixed costs).