{"id":344,"date":"2015-09-29T15:09:06","date_gmt":"2015-09-29T15:09:06","guid":{"rendered":"https:\/\/courses.candelalearning.com\/managacct2x10xmaster\/?post_type=chapter&p=344"},"modified":"2015-09-29T15:09:06","modified_gmt":"2015-09-29T15:09:06","slug":"glossary-4","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/suny-managacct\/chapter\/glossary-4\/","title":{"raw":"Glossary","rendered":"Glossary"},"content":{"raw":"
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GLOSSARY<\/h3>\r\n
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Break-even point<\/span><\/strong> That level of operations at which revenues for a period are equal to the costs assigned to that period so there is no net income or loss.<\/p>\r\n

Contribution margin<\/span> <\/strong>The amount by which revenue exceeds the variable costs of producing that revenue. The contribution margin per unit is the selling price minus the variable cost per unit.<\/p>\r\n

Contribution margin ratio<\/span><\/strong> Contribution margin per unit divided by selling price per unit, or total contribution margin divided by total revenues.<\/p>\r\n

Cost-volume-profit (CVP) analysis<\/span><\/strong> An analysis of the effect that any changes in a company's selling prices, costs, and\/or volume will have on income (profits) in the short run. Also called break-even analysis.<\/p>\r\n

Cost-volume-profit (CVP) chart<\/span><\/strong> A graph that shows the relationships among sales, volume, costs, and net income or loss.<\/p>\r\n

Fixed costs<\/span> <\/strong>Costs that remain constant (in total) over some relevant range of output.<\/p>\r\n

High-low method<\/span><\/strong> A method used in dividing mixed costs into their fixed and variable portions. The high plot and low plot of actual costs are used to draw a line representing a total mixed cost.<\/p>\r\n

Margin of safety<\/span><\/strong> Amount by which sales can decrease before a loss is incurred.<\/p>\r\n

Margin of safety rate<\/span> <\/strong>Margin of safety expressed as a percentage, which equals (Current sales \u2013 Break-even sales)\/Current sales.<\/p>\r\n

Mixed cost <\/span><\/strong>Contains a fixed portion of cost incurred even when the plant is completely idle and a variable portion that increases directly with production volume.<\/p>\r\n

Product mix<\/span> <\/strong>The proportion of the company's total sales attributable to each type of product sold.<\/p>\r\n

Profit equation<\/span> <\/strong>The equation is Net income = Revenue - Total variable costs - Fixed costs.<\/p>\r\n

Relevant range<\/span><\/strong> The range of production or sales volume over which the assumptions about cost behavior are valid.<\/p>\r\n

Scatter diagram<\/span><\/strong> A diagram that shows plots of actual costs incurred for various levels of activity; it is used in dividing mixed costs into their fixed and variable portions.<\/p>\r\n

Short run<\/span><\/strong> The time during which a company's management cannot change the effects of certain past decisions; often determined to be one year or less. In the short run, many costs are assumed to be fixed and unchangeable.<\/p>\r\n

Step cost<\/span><\/strong> A cost that remains constant at a certain fixed amount over a range of output (or sales) but then keeps increasing to a higher amount at certain points.<\/p>\r\n

Variable costs<\/span><\/strong> Costs that vary (in total) directly with changes in the volume of production or sales.<\/p>\r\n

*Some terms listed in earlier chapters are repeated here for your convenience.<\/p>\r\n\r\n<\/div>\r\n

<\/div>\r\n<\/section><\/div>\r\n<\/div>\r\n<\/div>\r\n<\/div>","rendered":"
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<\/h3>\n
\n
\n

GLOSSARY<\/h3>\n
\n

Break-even point<\/span><\/strong> That level of operations at which revenues for a period are equal to the costs assigned to that period so there is no net income or loss.<\/p>\n

Contribution margin<\/span> <\/strong>The amount by which revenue exceeds the variable costs of producing that revenue. The contribution margin per unit is the selling price minus the variable cost per unit.<\/p>\n

Contribution margin ratio<\/span><\/strong> Contribution margin per unit divided by selling price per unit, or total contribution margin divided by total revenues.<\/p>\n

Cost-volume-profit (CVP) analysis<\/span><\/strong> An analysis of the effect that any changes in a company’s selling prices, costs, and\/or volume will have on income (profits) in the short run. Also called break-even analysis.<\/p>\n

Cost-volume-profit (CVP) chart<\/span><\/strong> A graph that shows the relationships among sales, volume, costs, and net income or loss.<\/p>\n

Fixed costs<\/span> <\/strong>Costs that remain constant (in total) over some relevant range of output.<\/p>\n

High-low method<\/span><\/strong> A method used in dividing mixed costs into their fixed and variable portions. The high plot and low plot of actual costs are used to draw a line representing a total mixed cost.<\/p>\n

Margin of safety<\/span><\/strong> Amount by which sales can decrease before a loss is incurred.<\/p>\n

Margin of safety rate<\/span> <\/strong>Margin of safety expressed as a percentage, which equals (Current sales \u2013 Break-even sales)\/Current sales.<\/p>\n

Mixed cost <\/span><\/strong>Contains a fixed portion of cost incurred even when the plant is completely idle and a variable portion that increases directly with production volume.<\/p>\n

Product mix<\/span> <\/strong>The proportion of the company’s total sales attributable to each type of product sold.<\/p>\n

Profit equation<\/span> <\/strong>The equation is Net income = Revenue – Total variable costs – Fixed costs.<\/p>\n

Relevant range<\/span><\/strong> The range of production or sales volume over which the assumptions about cost behavior are valid.<\/p>\n

Scatter diagram<\/span><\/strong> A diagram that shows plots of actual costs incurred for various levels of activity; it is used in dividing mixed costs into their fixed and variable portions.<\/p>\n

Short run<\/span><\/strong> The time during which a company’s management cannot change the effects of certain past decisions; often determined to be one year or less. In the short run, many costs are assumed to be fixed and unchangeable.<\/p>\n

Step cost<\/span><\/strong> A cost that remains constant at a certain fixed amount over a range of output (or sales) but then keeps increasing to a higher amount at certain points.<\/p>\n

Variable costs<\/span><\/strong> Costs that vary (in total) directly with changes in the volume of production or sales.<\/p>\n

*Some terms listed in earlier chapters are repeated here for your convenience.<\/p>\n<\/div>\n

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