Chapter 21 VOCAB Practice Test a. b. c. d. e. f. Break-even point Composite unit Contribution margin per unit Contribution margin ratio Cost-volume-profit (CVP) analysis Curvilinear cost g. Degree of operating leverage (DOL) h. High-low method i. Least-squares regression j. Margin of safety k. Mixed cost I. Relevant range of operations m. Scatter diagram n. Step-wise cost Generic unit consisting of a specific number of units of each product; unit comprised in proportion to the expected sales mix of its products Product's contribution margin divided by its sale price Cost that changes with volume but not at a constant rate. Excess of expected sales over the level of break-even sales. Procedure that yields an estimated line of cost behavior by graphically connecting costs associated with the highest and lowest sales volume. Output level at which sales equals fixed plus variable costs; where income equals zero. Cost that remains fixed over limited ranges of volumes but changes by a lump sum when volume changes occur outside these limited ranges. Statistical method for deriving an estimated line of cost behavior that is more precise than the high-low method and the scatter diagram. Company's normal operating range; excludes extremely high and low volumes not likely to occur Ratio of contribution margin divided by pretax income; used to assess the effect on income of changes in sales. Planning method that includes predicting the volume of activity, the costs incurred, sales earned, and profits received Graph used to display data about past cost behavior and sales as points on a diagram Cost that behaves like a combination of fixed and variable costs. Amount that the sale of one unit contributes toward recovering fixed costs and earning profit; defined as sales price per unit minus variable expense per unit