Cost Terms
The amount of cash or cash equivalent sacrificed for goods and/or services that are expected to bring a current or future benefit to the organization is known as this.
What is a cost?
Production costs include direct materials, direct labor, and this.
What is manufacturing overhead?
Gross profit is calculated using these two amounts.
What are sales revenue and cost of goods sold?
The point at which total revenue equals total cost is known as this.
What is the break-even point?
A company estimates sales of 100 units at $5 each, unit cost of goods sold at $3, and fixed administrative expenses at $50. This is the company's budgeted operating income.
What is $150?
Within the relevant range, these costs do not change in total as output changes.
What are fixed costs.
The total product cost divided by the number produced is known as this.
What is unit cost?
Gross profit less selling and administrative expenses yields this subtotal.
What is operating income?
This is the difference between sales and variable costs.
What is the contribution margin?
This budget is the most common starting point in the information-gathering process for the master budget.
What is the sales budget?
Within the relevant range, these costs stay constant on a per unit basis as output changes.
What are variable costs?
Fixed cost per unit is $3 when 8,000 units are produced and $4 when 6,000 units are produced. This is the total fixed cost when nothing is produced.
What is $24,000?
This measure of a company's financial health might be assessed through a current ratio, quick ratio, or operating cash flow ratio.
What is liquidity?
Sales can decline by this amount before losses are incurred.
What is the margin of safety?
A company plans to sell 100 units. The selling price is $3. There are 8 units in beginning inventory, and the company would like to have 3 units in ending inventory. The company plans to produce this many units in the coming period.
What is 95?
A factor that leads to a change in cost or activity is known as this.
What is a cost driver?
Selling costs, advertising costs, and administrative costs would be examples of this general classification of costs?
What are period costs?
This is the type of analysis being performed when financial data for a single company is analyzed over several years.
What is trend (or time series) analysis?
This type of cost has occurred in the past, cannot be changed, and is not relevant to capital decision making.
What is a sunk cost?
A company prepares a master budget, but actual units sold exceeded the budgeted amount. This type of budget would be produced based on standard costs and actual results to determine the company's efficiency at production.
What is a flexible budget?
The benefit given up or sacrificed when one alternative is chosen over another is known as this.
What is an opportunity cost?
This is calculated as beginning work in process, plus product costs incurred, less ending work in process.
What is the cost of goods manufactured?
When performing vertical analysis on a common-size income statement, this amount is listed as 100%.
What is net sales?
This is the relative mix of fixed and variable costs.
This type of budgeting involves mid-level managers in the process in addition to upper-level management.
What is participative budgeting?