Chapter 6 Flashcards
(17 cards)
Contribution Margin (CM) =
Sales - Variable Costs
Net Operating Income (Profit) =
CM - Fixed Expenses
What is Net Operating Income amount when you are at break-even point?
$0
Unit CM =
Selling Price per Unit - Variable Expense per Unit
CM Ratio =
CM/Total Sales
Unit CM Ratio =
Unit CM/Unit Sales Price
Variable Expense Ratio =
Variable Expenses/Total Sales
Variable Expense Ratio per Unit =
Variable Expense per Unit/Unit Sales Price
Change in CM =
CM Ratio X Change in Sales
Profit (Using CM Ratio) =
CM Ratio x Sales - Fixed Expenses
Units to Break Even =
Fixed Expenses/Unit CM
Dollars Sales to Break Even =
Fixed Expenses/CM Ratio
Unit Sales to obtain Target Profit =
Target Profit + Fixed Expenses/Unit CM
Dollar Sales to obtain Target Profit =
Target Profit + Fixed Expenses/CM Ratio
Margin of Safety (in dollars) =
Total Sales - Break Even Sales
Margin of Safety (percentage) =
Margin of Safety (in dollars)/Total Sales
Margin of Safety (in units) =
Margin of Safety (in dollars)/Unit Sales Price
