acct ch18

Output level at which sales equal fixed plus variable costs; where income equals zero

Generic unit consisting of a specific number of units of each product; unit comprised in proportion to the expected sales mix of its products

Amount that the sale of one unit contributes toward recovering

Product’s contribution margin divided by its sale price

Planning method that includes predicting the volume of activity, the cost incurred, sales earned, and profits received

Pg. 764

Cost that changes with volume but not at a constant rate

Ratio of contribution margin divided by pretax income; used to assess the effect on income of changes in sales

Line drawn on a graph to visually fit the relation between cost and sales

Procedure that yields an estimated line of cost behavior by graphically connecting costs associated with the highest and lowest sales volume

Statistical method for deriving an estimated line of cost behavior that is more precise than the high-low method and the scatter diagram

Excess of expected sales over the level of break-even sales

Cost that behaves like a combination of fixed and variable costs

Extend, or relative size, of fixed costs in the total cost structure

Company’s normal operating range; excludes extremely high and low volumes not likely to occur

Ratio of sales volumes for the various products sold by a company

Graph used to display data about past cost behavior and sales as points on a diagram

Cost that remains fixed over limited ranges of volumes but changes by a lump sum when volume changes occur outside these limited ranges

For multi-product firms, the sum of each product’s unit of contribution margin multiplied by that product’s sales mix percentage