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