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AC1109

Topic 2

TermDefinition
Contribution For every unit sold; how much revenue goes towards covering FC's; there after going towards profit making
Margin of safety It is the difference between the current level of sales and the break-even level of sales
Operating Leverage This is a measure of how sensitive profit is to the percentage changes in sales
What does the Sales Mix reflect? The percentage of total volume sales contributed by each individual product
What are the Key Assumptions of CVP Analysis? Variable costs per unit are constant Fixed Costs are constant within the relevant range Costs can be classified as Fixed or Variable Sales price per unit remains constant Sales volume = Production Volume Within a multiproduct firm; there is a constan
Created by: peadarbailey1206
 

 



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