All formulas

Question 1

Operating income before tax

Answer 1

SPx - VCx - FC = P

Question 2

Contribution margin (units)

Answer 2

SP-VC/ CM

Question 3

Contribution margin ratio

Answer 3

CM/ SP

Question 4

Breakeven in units

Answer 4

FC/CM

Question 5

Breakeven in sales dollars

Answer 5

FC/CMR

Question 6

Breakeven math in units and dollars

Answer 6

SPx = VCx + FC (solve for x) = units

Multiply units by SP/ unit = $

Question 7

Target Operating Income before tax in units

Answer 7

FC + P /CM

Question 8

Target Operating Income before tax in sales dollars

Answer 8

FC + P / CMR

Question 9

Target operating income before tax using math

Answer 9

VCx FC + Target OI = units required

SPx = VCx + FC = P $

Question 10

Target operating income after tax - units

Answer 10

FC + (Proft after tax / (1-tax rate) / CM

Question 11

Target operating income after tax $

Answer 11

FC + (Proft after tax / (1-tax rate) / CMR

Question 12

Target operating income after tax in units using math

Answer 12

SPX = VCx + FC + (profit / (1-tax rate))

Question 13

Target operating income after tax in dollars using math

Answer 13

FC + (target profit / (1-tax rate)) / CMR

Question 14

Margin of safety in dollars

Answer 14

actual(expected) sales - Breakeven sales

Question 15

Margin of safety %

Answer 15

actual (expected) sales - breakeven sales / actual expected sales

Question 16

true or false

CM at breakeven point are equal

Answer 16

true

Question 17

how do you figure out what CM if variable costs are 55% of sales

Answer 17

CM = (1 - 55%)

= .45

Question 18

How do you figure out what CMR is if variable costs are 55% of sales

Answer 18

CMR = (1-55%) / 1

= 45%

Question 19

How do you calculate sales mix

Answer 19

Units for product 1 / total units

units for product 2 / total units

Question 20

How do you calculate CM using weighted average

Answer 20

(unit CM x sales mix %) + (unit CM x sales mix %) = weight avg. unit CM

Question 21

how do you calculate breakeven point in units using weight average

Answer 21

FC / Weighted average unit CM = BE units

Question 22

how do you calculate the BE point in units for each product using weighted average

Answer 22

total BE units x sales mix % for each product

Question 23

how do you calculate the BE point in dollars for each product using weighted average

Answer 23

CM for each unit x the BE in units for each product
total units say is 1,000
CM for product 1 is 200
sales mix % is 75%

1000 x 75% = 750 units (be units)
200 x 750 = $150,000

do for each product

Question 24

total cm in dollars using weight average

Answer 24

total be point for each product in sales dollars added up

this is also called the fixed cost

Question 25

How do you calculate be point sales dollars using weighted average

Answer 25

(CMR for each product x sales mix) + (CMR for each product x sales mix) = weight avg CMR

be in $
FC / Weighted avg CMR = BE in dollars

Question 26

How do you calculate degree of operating leverage

Answer 26

(CM per unit x units)/ operating income

Question 27

how do you calculate decrease in sales of say 10%

Answer 27

10% x degree of operating leverage = decrease % or

operating income x % of decrease = $ decrease