CVP and Contribution Flashcards

(6 cards)

1
Q

Contribution per unit

A

Selling price – Variable cost

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2
Q

Break‑even point (units)

A

Fixed cost ÷ Contribution per unit

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3
Q

Break‑even point (£)

A

Fixed cost ÷ Contribution‑to‑sales ratio

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4
Q

Margin of Safety

A

Budgeted sales – Break‑even sales (units or £); MoS % = (MoS units / Budget units) × 100

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5
Q

Operating leverage

A

Contribution ÷ Operating profit — gauges sensitivity of profit to sales swings

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6
Q

High‑low method

A

VC pu = ( ΔY / ΔX ); use Y = a + bX to back‑solve fixed cost

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