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Bus 202

Chapter 19 Glossary

QuestionAnswer
Absorption costing A costing approach in which all manufacturing costs are charged to the product
Cost Structure The relative proportion of fixed versus variable costs that a company incurs
Degree of operating leverage a measure of the extent to which a company's net income reacts to a change in sales. It is calculated by dividing contribution margin by net income
Operating leverage The extent to which a company's net income reacts to a change in sales. Operating leverage is determined by a company's relative use of fixed versus variable cost
Sales mix The relative percentage in which a company sells its multiple products
Theory of constraints A specific approach used to identify and manage constraints in order to achieve the company's goals
Variable costing a costing approach in which only variable manufacturing costs are product costs, and fixed manufacturing costs are periods cost (expenses)
Created by: cammccarty