Chapter 3 - Cost-Volume-Profit Analysis Flashcards Preview

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Flashcards in Chapter 3 - Cost-Volume-Profit Analysis Deck (13):
1

How do you calculate Contribution Margin/units?

CM/units = SP/units - VC/units

2

How do we calculate CM ratio?

CM ratio = Contribution margin/Sales

3

How do we calculate Break-Even in units?

BE in units = Fixed costs/(CM/unit)

4

How do we calculate Break-Even in sales dollars?

BE in Sales $ = Fixed costs/CM ratio

5

How do we calculate Target Operating Income in units?

Target OI in units = (Fixed costs + Target operating income)/(CM/unit)

6

How do we calculate Target Operating Income in sales dollars?

Target OI in Sales $ = (Fixed costs + Target operating income)/(CM ratio)

7

How do we calculate the Margin of Safety (MoS)?

MoS = Budgeted Sales (Actual Sales) - Break-Even Sales

8

How do we calculate Margin of Safety (MoS) in units?

MoS in units = MoS/(Selling Price per unit)

9

How do we calculate the Margin of Safety (MoS) ratio?

MoS ratio = MoS/Sales

10

How do we calculate Operating Leverage (OL)?

OL = Contribution margin/Operating Income

11

How else can we calculate Operating Income (OI)?

OI = Net operating income/(1 - Tax Rate)
OR
OI = Margin of Safety x CM ratio

12

How do we calculate Net Operating Income (NOI)?

NOI = Operating Income - Tax

13

How do you calculate Contribution Margin (CM)?

CM = Sales - Variable Costs
OR
CM = (Selling Price - Variable Costs) x Quantity