Chapter 3 Flashcards
1
Q
Profit equation
A
Total revenues - Total costs
2
Q
Unit contribution margin
A
Sales price - variable costs per unit
3
Q
Total contribution margin
A
Total revenues - total variable costs
4
Q
Break-even point
A
Volume level where profits equal zero
5
Q
Profit-volume analysis
A
CVP using a single-profit line
6
Q
Cost structure
A
Proportion of fixed and variable costs to total costs of an organization
7
Q
Operating leverage
A
The extent to which an organization’s cost structure is made up of fixed costs
8
Q
Margin of safety
A
The excess of projected or actual sales over the break-even volume
