Managerial Accounting Final Exam Cost Volume Profit (C.V.P.) Analysis (Ch 3)

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Formulas to know:

Profit= Sales- Variable Costs- Fixed Costs
(formula w/ total sales & variable costs)
Profit= SP(x)- VC per unit (x)- Fixed Costs
(formula w/ per unit sales & variable costs)
-To solve for breakeven point (in units) set profit= $0

Contribution Margin (CM)

CM per unit= Sales Price - Variable Cost per unit
-Sales price can be broken up into 2 parts: Variable Cost and Contribution Margin
Sales$
-VC
=CM
-FC
=Profit
-Sometimes in problems, variable costs or contribution margin will be expressed as % of sales price:
CM ratio=CM/SP

Other formulas

# units= (Profit+ FC)/ (CM per unit)
Sales (in $)= (Profit+ FC)/ (CM ratio)

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