Flashcards in Chapter 3 - Cost-Volume-Profit Analysis Deck (13):
How do you calculate Contribution Margin/units?
CM/units = SP/units - VC/units
How do we calculate CM ratio?
CM ratio = Contribution margin/Sales
How do we calculate Break-Even in units?
BE in units = Fixed costs/(CM/unit)
How do we calculate Break-Even in sales dollars?
BE in Sales $ = Fixed costs/CM ratio
How do we calculate Target Operating Income in units?
Target OI in units = (Fixed costs + Target operating income)/(CM/unit)
How do we calculate Target Operating Income in sales dollars?
Target OI in Sales $ = (Fixed costs + Target operating income)/(CM ratio)
How do we calculate the Margin of Safety (MoS)?
MoS = Budgeted Sales (Actual Sales) - Break-Even Sales
How do we calculate Margin of Safety (MoS) in units?
MoS in units = MoS/(Selling Price per unit)
How do we calculate the Margin of Safety (MoS) ratio?
MoS ratio = MoS/Sales
How do we calculate Operating Leverage (OL)?
OL = Contribution margin/Operating Income
How else can we calculate Operating Income (OI)?
OI = Net operating income/(1 - Tax Rate)
OI = Margin of Safety x CM ratio
How do we calculate Net Operating Income (NOI)?
NOI = Operating Income - Tax