A set of activities that transforms raw materials and resources into the goods and services end users purchase and consume.

Sacrifice of resources

Costs that change in direct proportion with a change in the volume within the relevant range

Analysis explores the relationship between revenue, cost, and volume and their effect on profits

The proportion of fixed and variable costs of total costs

A responsibility center of an organization assigned to a manager who is held accountable for its operations and resources

Foregone benefit from the best alternative course of action

Costs that remain unhanged as volume changes within the relevant range

Average Selling price per unit (P) x Units of output produced and sold (X)
TR = PX

Contribution margin / operating profit

A method that assigns costs of activities needed to make a product, then sums the cost of those activities to compute the total costs of the product

Costs related to inventory

Direct Materials, Direct labor, variable materials, fixed manufacturing costs

{Variable Cost per unit (V) x units of output (X)} + fixed costs (F)
TC = VX + F

Fixed costs / contribution margin ratio

A system that allows firms to target profitable customers by assessing customer revenues and costs

Non-manufacturing costs related to the firm

Recognized as expenses when the costs are incurred

P - V
Price per unit - Variable cost per unit

Fixed costs + Target Profit
= ------------------------------------------
Unit contribution margin

Signs off on financial statements is an example activity of what key financial title in an organization?

Process of assigning indirect costs to products, services, business units, etc

Assigning the costs in the cost pool to the cost object is the 3rd rule of what cost method?

fixed costs / Unit Contribution margin

Target Operating Profit
= -------------------------------
(1- Tax Rate)