ACTG 211 Ch.2

Margin of Safety

The amount by which sales can drop before losses are incurred is the...

least-squares regression

The best fitting line minimizes the sum of the squared errors when using...

Total Fixed Expenses

The break-even point is reached when the contribution margin is equal to...

Sales

The variable expense ratio is the ratio of variable expense to...

Net Operating Income

(unit sales - unit sales to break even) × unit contribution margin. What does this equal?

least-squares regression

A method that uses all the available data points to divide a mixed cost into its fixed and variable components is called...

Decrease in Unit Variable cost

According to the CVP analysis model and assuming all else remains the same, profits would be increased by a...

Degree of Operating Leverage

An increase in sales will increase net operating income by a multiple of that increase in sales. The multiple is known as the...

Selling price, volume, product mix

CVP analysis allows companies to easily identify the change in profit due to changes in...

Fixed cost

In a least-squares regression line, the vertical intercept (a) of the line represents the total...

Contribution Margin

What becomes profit after fixed expenses are covered?

Operating Leverage

What is a measure of how sensitive net operating income is to a given percentage change in sales dollars?

Incremental Analysis

When the analysis of a change in profits only considers the costs and revenues that will change as the result of the decision, the decision is being made using...

Variable Cost Per Unit of Activity

When using the high-low method, the slope of the line equals the...