Flashcards in CVP Analysis Deck (12):

1

## Contribution Margin/unit

###
= unit selling - unit variable

or

= total CM/ Units sold

2

## Contribution Margin Ratio

###
= contribution margin per unit / unit selling price

or

= total CM/ Total sales

3

## Variable Cost Ratio

###
= Variable cost per unit / unit selling price

or

= total VC/total sales

4

## Break Even ($)

### = total fixed costs ($) / contribution ratio

5

## Break Even Units

### = total fixed costs ($) / contribution margin per unit

6

## Break-even units multiple products

### = total fixed costs ($) / Weighted average contribution margin per unit

7

## Net income before taxes

### = Net income after tax / (1-tax rate)

8

## Required sales

### = (FC + target NIBT) / CM ratio

9

## Degree of Operating leverage

### = contribution margin / net income

10

## Percentage change in profits

### = degree of operating leverage * Percentage change in sales

11

## Margin of Safety ($)

### = actual (expected) sales ($) - Break even sale ($)

12