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Managerial Accounting Chapter 6
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Key Concepts:
Terms in this set (22)
cost volume profit graph
break even point
point at which the company is making zero profit
break even point in units
Fixed Costs / Unit Contribution Margin
break even point in sales revenue
fixed costs / contribution margin ratio
target profit
allows managers to determine the number of units sold or total sales revenue required to earn a target profit
target profit in units
(total fixed costs + target profit) / unit contribution margin
target profit in total sales
(total fixed costs + target profit) / contribution margin ratio
margin of safety
indicates how much cushion there is between the current (or expected) level of sales and the break even point
margin of safety formula
actual or budgeted sales - break even sales
degree of operating leverage
when a company uses fixed costs to leverage a relatively small change in sales revenue into a larger effect on profit
degree of operating leverage formula
Contribution Margin / Net Operating Income
Multi-Product CVP Analysis
makes an assumption about the relative mix of products or services sold
product mix formula
units sold of one product / units sold of all products
weighted average unit contribution margin
contribution margin per unit X product mix (do for each product)
add together for total WAUCM
Break even units
total fixed costs / WAUCM
target profit units
(total fixed costs + target profit) / WAUCM
weighted average contribution margin ratio
total contribution margin / total sales revenue
sales revenue mix
sales revenue per product / total sales revenue
break even sales dollars
Total Fixed Cost / WACMR
target profit total sales
(fixed costs + target profit)/ WACMR
target profit sales per product
target profit in total sales X sales revenue mix
target profit units per product
target profit in total sales X product mix
THIS SET IS OFTEN IN FOLDERS WITH...
Managerial Accounting Chapter 1
16 terms
Managerial Accounting Chapter 5
10 terms
OTHER SETS BY THIS CREATOR
Operating budgets
9 terms
Change in Accounting Principle
8 terms
ACCT 329 Chapter 4
37 terms
ACCT 329 Chapter 3
26 terms