Accounting 2242-assignment 2 solution

Accounting 2242-assignment 2 solution - Accounting 2242.1...

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Accounting 2242.1 Assignment 2 Due date: May 23, 2006 Question 1-Definitions Provide definitions for the following: Activity base – A measure of whatever causes the incurrence of a variable cost. Step-variable cost – A cost that is obtainable only in large chunks and that increases and decreases only in response to fairly wide changes in the activity level. Committed fixed cost – Those fixed costs that are difficult to adjust and that relate to the investment in facilities, equipment, and the basic organizational structure of a firm. Mixed cost – A cost that contains both variable and fixed cost elements. High low method – A method of separating a fixed cost into its fixed and variable elements by analyzing the change in cost between the high and low levels of activity. Contribution margin – The amount remaining from sales revenues after all variable expenses have been deducted. Break-even point – The level of sales at which profit is zero. Contribution margin ratio – The contribution margin as a percentage of total sales Incremental analysis – An analytical approach that focuses only on those items of revenue, cost, and volume that will change as a result of a decision. Operating leverage – A measure of how sensitive net operating income is to a
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This note was uploaded on 05/30/2008 for the course COMM 2242 taught by Professor Baxter during the Spring '07 term at Saint Mary's University Texas.

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Accounting 2242-assignment 2 solution - Accounting 2242.1...

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