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