Definitions: A) Breakeven B) Contribution Margin C) Cost Behavior D) Margin of S

Question

Definitions:

A) Breakeven

B) Contribution Margin

C) Cost Behavior

D) Margin of Safety

E) Relevant Range

F) Sales Mix

G) Fixed Costs

H) Variable Costs

I) Sensitivity Analysis

Match the following terms with the correct definitions: 1. Costs that do not change in total over wide ranges of volume. Technique that estimates profit or loss results when conditions 2. change. 3. The sales level at which operating income is zero. 4. Drop in sales a company can absorb without incurring an operating loss. 5. Combination of products that make up total sales 6. Net sales revenue minus variable costs. 7. Describes how a cost changes as volume changes. 8. Costs that change in total in direct proportion to changes in volume. 9. The band of volume where total fixed costs and variable cost per unit remain constant.

Explanation / Answer

1. Costs that do not change in total over wide ranges of volume Fixed costs 2. Technique that estimates profit or loss results when conditions change. Sensitivity analysis 3. The sales level at which operating income is zero Breakeven 4. Drop in sales a company can absorb without incurring an operating loss. Margin of safety 5. Combination of products that make up total sales. Sales mix 6. Net sales revenue minus variable costs Contribution margin 7. Describes how a cost changes as volume changes. Cost behavior 8. Costs that change in total in direct proportion to changes in volume. Variable costs 9. The band of volume where total fixed costs and variable cost per unit remain constant Relevant range

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