Question

Documents References Mailings Review View Aa A E Eva ÎL r ADACI As Styles Styles Pane Match the definitions with the most appropriate term from the list provided. Terms may be used once, more than once, or not at all. Description Terms Buffer zone that identifies how much sales can drop before the business suffers a loss. An investment in technology that increases total fixed costs while - reducing the variable cost per unit. Total Fixed Costs + Target Profit Contribution Margin Ratio How a company uses variable costs versus fixed costs to perform its operations 5. The proportion of units sold from each product or service line. 6. When two profit equations yield the same profit. 7. Actual or budgeted sales minus break-even sales. 8. Total fixed costs plus target profit. ES T Contribution Margin Net Operating Income Total Fixed Costs + Target Profit 10. Unit Contribution Margin Options: Automation Cost Structure Degree of Operating Leverage Indifference Point Margin of Safety Product Mix Target Contribution Margin • Target Sales Revenue • Target Units • Weighted average contribution margin

Answer 1

	Term (Answer)	Description / Explanation
1	Margin of Safety	The difference between the actual sales & break even point
2	Automation	investing in machines to reduce variable costs with additional fixed cost for example depreciation
3	Target Sales Revenue
4	Cost Structure	Alignment of company's variable & fixed cost to maximize profit
5	Product Mix	how many units of what product should be sold
6	Indifference Point	When the profit remains the same irrespective of the equation
7	Margin of Safety	The difference between the actual sales & break even point
8	Target contribution Margin	Sum of fixed cost and target profit results in target contribution
9	Weighted Average Contribution Margin	Ratio of Contribution to the Income
10	Target Units	Target contribution divided by unit contribution margin