Managerial Accounting Concepts

These flashcards cover key concepts and terms in managerial accounting, particularly focusing on cost-volume-profit analysis and related calculations.

Cost-Volume Analysis

A process that analyzes how changes in costs and volume affect a company's operating income and net income.

Contribution Margin

The difference between sales revenue and variable costs, which contributes to covering fixed costs.

Breakeven Point

The level of sales at which total revenues equal total costs, resulting in zero profit.

Contribution Margin Ratio

The contribution margin divided by sales, expressed as a percentage.

Operating Leverage

A financial concept that measures a company's fixed costs as a percentage of total costs, indicating sensitivity to sales changes.

Margin of Safety

The amount by which sales can drop before a business incurs losses, calculated as total sales minus breakeven sales.

Target Profit

The desired profit level set by a company that must be achieved in addition to covering all expenses.

Variable Costs

Costs that change in proportion to the volume of goods or services produced.

Fixed Costs

Costs that do not change with the level of goods or services produced.

Sales Mix

The proportion of different products or services sold by a company.