Untitled Flashcards Set

Break-even point

The point at which a business’s total sales equal its total expenses; the business has not yet made a profit but has not incurred any losses.

Capital expenditure

A one-time purchase a business makes (e.g., land, building, equipment).

Cost-based pricing

A pricing method in which the business adds a predetermined markup to the total cost of making the product.

Depreciation

Loss of value.

Economies of scale

Cost savings created by increased levels of production.

Fixed costs

Business costs that are not affected by changes in sales volume; also known as fixed expenses.

Fixed expenses

Operating costs that do not increase or decrease with changes in production; also known as fixed costs.

Gross profit

A company’s revenue after subtracting the costs of the products it has sold.

Mixed costs

Expenses that are fixed until the company reaches a certain level of production, then become variable; also called semi-variable costs or semi-fixed costs.

Operating costs

The ongoing, day-to-day expenses of running a business that are not directly related to production.

Price-based costing

A pricing method in which the business determines how much customers will pay for a product, then adjusts costs accordingly.

Price markup

The difference between the total cost of a product and its selling price.

Sales commission

An amount a salesperson earns per sale, either a percentage or a flat rate.

Semi-fixed costs

Expenses that are fixed until the company reaches a certain level of production, then become variable; also called mixed costs or semi-variable costs.

Semi-variable costs

Expenses that are fixed until the company reaches a certain level of production, then become variable; also called mixed costs or semi-fixed costs.

Total cost

The sum of the overhead and direct costs required to make a product.

Variable costs

Business costs that change according to changes in sales volume; also known as variable expenses.

Variable expenses

Operating costs that fluctuate with changes in production; also known as variable costs.