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break-even analysis  Analysis of the level of sales at which a project would make zero profit.
contribution margin  Amount that each additional product, such as a jet engine, contributes to after-tax profit of the whole project: (Sales price − Variable cost) × (1 − Tc), where Tc is the corporate tax rate.
decision trees  A graphical representation of alternative sequential decisions and the possible outcomes of those decisions.
fixed costs  A cost that is fixed in total for a given period of time and for given volume levels. It is not dependent on theamount of goods or services produced during the period.
Monte Carlo simulation  An exercise that identifies,outcomes and probabilities and generates possible scenarios.
scenario analysis  Analysis of the effect on the project of different scenarios, each scenario involving a confluence of factors.
sensitivity analysis  Analysis of the effect on the project when there is some change in critical variables such as sales and costs.
variable costs  A cost that varies directly with volume and is zero when production is zero.







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