Chapter 11
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| the manner in which a cost changes as a related activity changes | cost behavior
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| costs that vary in proportion to changes in the activity base | variable cost
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| when the activity base is units produced, direct materials and direct labor costs are normally classified as... | variable costs
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| costs that remain the same in total dollar amount as the activity base changes | fixed costs
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| costs that have characteristics of both a variable and a fixed cost | mixed costs
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| variable cost per unit= | difference in total cost/ difference in production
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| fixed costs= | total cost-(variable cost per unit X units produced)
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| total cost= | (variable cost per unit X units produced)+ fixed costs
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| examination of the relationships among selling prices, sales and production volume, costs, expenses, and profits | cost-volume-profit analysis
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| contribution margin= | sales-variable costs
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| contribution margin-fixed costs= | income from operations
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| contribution margin ratio= | contribution margin/ sales
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| change in income from operations= | change in sales dollars X contribution margin ratio
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| break even sales= | fixed costs/ unit contribution margin
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| to earn a target profit | sales= (fixed costs + target profit)/ unit contribution margin
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| operating leverage= | contribution margin/ income from operations
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| Fixed costs | building depreciation, plant manager salary, property insurance, property taxes, branch manager salary
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| variable costs | instructor salaries, fuel, direct materials, wages
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