Batch-related cost
A cost that varies with the number of batches regardless of how many units are in each batch
Breakeven point
The point where the total cost line intersects the total revenue line
Contribution margin
Total sales less total variable costs at a given level of activity
Contribution margin per unit
The selling price per unit less the variable cost per unit,
Contribution margin ratio
The contribution margin per unit divided by the selling price per unit
Cost-volume-profit (CVP) analysis
The study of how costs and profits change in response to changes in the volume of goods and services provided to customers,
Depreciation
The cost of a long-term asset spread over the period the assets are used
Direct labor
The cost of employees who manufacture the product
Direct material
The cost of materials that are directly traceable to the product and that are costly enough to warrant tracing them
Facility-sustaining cost
A cost incurred to maintain the company's capacity to operate
Incremental cost
The additional cost associated with an alternative
Incremental profit
The difference between the incremental revenues and incremental costs of a particular alternative
Incremental revenue
The additional revenue associated with an alternative
Indirect labor
The cost of production employees who do not physically manufacture the product
Indirect material
The cost of production materials that either cannot be traced to the product or whose cost is not enough to warrant tracing
Manufacturing overhead
All costs other than direct materials and direct labor that are incurred to manufacture products
Model
A representation of reality
Nonproduct cost
A cost that is related to selling the products and services or administering the company
Opportunity cost
A benefit forgone when choosing one alternative over another
Product cost
A cost that is incurred to obtain or manufacture a product
Product-sustaining cost
A cost that varies with the number of product lines
Relevant variable
A cost or revenue that will occur in the future and that differs among the alternatives considered
Sales mix
The relative proportions of units of products sold in a multiple-product company,
Sensitivity analysis
The process of changing key variables in CVP analysis to determine how sensitive the CVP relationships are to changes,
Sunk cost
A past cost; therefore, never relevant in short-term operating decisions
Unit-related cost
A cost that varies with the number of units,