study of the relations among revenues, costs and volume and their effect on profit.
Unit contribution margin
Difference between revenues per unit (price) and variable costs per unit
total contribution margin
Difference between revenues and total variable costs
contribution margin ratio
Contribution margin as a percentage of sales revenue
Volume level at which profits equal zero
Extent to which an organization's cost structure is made up of fixed costs.
margin of safety
The excess of projected or actual sales over the break-even volume.
margin of safety percentage
The excess of projected or actual sales over the break-even volume expressed as a percentage of the break-even volume.
assumption and limitation of CVP analysis
Process of estimating revenues and costs of alternative actions available to decision makers and of comparing these estimates to the status quo.
With two or more alternatives, costs that differ among or between alternatives.
Revenues that change in response to a particular course of action.
Sum of all costs of manufacturing and selling a unit or product (includes both fixed and variable costs).
Cost incurred in the past that cannot be changed by present or future decisions.
Order that will not affect other sales and is usually a short-run occurrence.
Period of time over which the capacity will be unchanged usually one year.
life cycle costing
Equals the target price minus desired profit.
make vs. buy decision
Decision concerning whether to make needed goods internally or purchase them from outside sources.
Forgone benefit from the best (forgone) alternative course of action.
contribution margin per unit of scarce resource
Sales price-Variable costs per unit