Definition of incremental revenue

incremental revenue

the revenue resulting from an additional contemplated sale

economically reworked

when the incremental revenue from the sale of reworked defective units is greater than
the incremental cost of the rework

relevant costing

a process that compares, to the extent possible
and practical, the incremental revenues and incremental costs of alternative decisions

Incremental cash flows

Difference between the firm's cash flows with and without a project.

Incremental costs and benefits

Costs and benefits that would occur if a particular course of action were
taken compared to those that would occur if that course of action were not taken.

Incremental internal rate of return

IRR on the incremental investment from choosing a large project
instead of a smaller project.

Industrial revenue bond (IRB)

Bond issued by local government agencies on behalf of corporations.

Revenue bond

A bond issued by a municipality to finance either a project or an enterprise where the issuer
pledges to the bondholders the revenues generated by the operating projects financed, for instance, hospital
revenue bonds and sewer revenue bonds.

Revenue fund

A fund accounting for all revenues from an enterprise financed by a municipal revenue bond.

Total revenue

Total sales and other revenue for the period shown. Known as "turnover" in the UK.

NET SALES (revenue)

The amount sold after customers’ returns, sales discounts, and other allowances are taken away from
gross sales. (Companies usually just show the net sales amount on their income statements, omitting returns, allowances, and the like.)

Incremental budget

A budget that takes the previous year as a base and adds (or deducts) a percentage to arrive at
the budget for the current year.

Revenue

Income earned from the sale of goods and services.

Revenue

Amounts earned by the company from the sale of merchandise or services; often used interchangeably with the term sales.

Unearned revenue

Money that has been paid by customers for work yet to be done or goods yet to be provided.

revenue-driven expenses

Operating expenses that vary in proportion to
changes in total sales revenue (total dollars of sales). Examples are sales
commissions based on sales revenue, credit card discount expenses, and
rents and franchise fees based on sales revenue. These expenses are one
of the key variables in a profit model. Segregating these expenses from
other types of expenses that behave differently is essential for management
decision-making analysis. (These expenses are not disclosed separately
in externally reported income statements.)

incremental analysis

a process of evaluating changes that
focuses only on the factors that differ from one course of
action or decision to another

incremental cost

the cost of producing or selling an additional
contemplated quantity of output

incremental separate cost

the cost that is incurred for each
joint product between the split-off point and the point of sale

revenue center

a responsibility center for which a manager is accountable only for the generation of revenues and has no control over setting selling prices, or budgeting or incurring costs

Incremental cost

The difference in costs between alternative actions.

Revenue

An inflow of cash, accounts receivable, or barter from a customer in exchange
for the provision of a service or product to that customer by a company.

Unearned revenue

A payment from a customer that cannot yet be recognized as earned
revenue, because the offsetting service or product for which the money was paid has
not yet been delivered.

Internal Revenue Code

Refers to all federal tax laws as a group.

Internal Revenue Service

A federal agency empowered by Congress to interpret and enforce tax-related laws.

Fictitious Revenue

revenue recognized on a nonexistent sale or service transaction.

Premature Revenue

revenue recognized for a confirmed sale or service transaction in a period
prior to that called for by generally accepted accounting principles.

Realizable Revenue A revenue transaction where assets received in exchange for goods and

services are readily convertible into known amounts of cash or claims to cash.

Realized Revenue

A revenue transaction where goods and services are exchanged for cash or
claims to cash.

Revenue Recognition

The act of recording revenue in the financial statements. revenue should
be recognized when it is earned and realized or realizable.

Sales Revenue Revenue recognized from the sales of products as opposed to the provision of

services.

Service Revenue

revenue recognized from the provision of services as opposed to the sale of
products.

Contribution margin

The margin that results when variable production costs are subtracted
from revenue. It is most useful for making incremental pricing decisions
where a company must cover its variable costs, though perhaps not all of its fixed
costs.

Direct-Response Advertising

Advertising designed to elicit sales to customers who can be
shown to have responded specifically to the advertising in the past. Such costs can be capitalized
when persuasive historical evidence permits formulation of a reliable estimate of the future revenue
that can be obtained from incremental advertising expenditures.

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