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Accounting Exam #1
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ch 1, 2, 5, 6, 12
Terms in this set (21)
breakeven units formula method
unit sales to break even = fixed expenses/unit CM
breakeven units equation method
profit = unit CM x Q - FE (the profit is 0)
breakeven sales dollars formula method
dollar sales to break even = fixed expenses/CM ratio
breakeven sales dollars equation method
profit = CM ratio x sales - FE
target profit analysis UNITS equation method
profit = unit CM x Q - FE (this time we know the profit)
target profit analysis UNITS formula method
unit sales to attain the target profit = (TP + FE)/unit CM
target profit analysis SALES DOLLARS
dollar sales to attain a target profit = TP + FE / CM RATIO
DOL
CM/NOI
percentage change in net income
degree of operating leverage x percentage change in sales
margin of safety in dollars
total budgeted (or actual) sales - break even sales
margin of safety percentage
margin of safety in dollars/total budgeted or actual sales in dollars
contribution format income statement
profit=(sales-variable expenses)-fixed expenses
profit=(PxQ-CxQ)-FE
profit=unit CM x Q - FE
CM ratio
=contribution margin/sales
0r
= unit CM/unit selling price
or
=1-variable expense ratio
change in contribution margin
CM ratio x change in sales
change in profit
=CM ratio x change in sales - (change in) fixed expenses
variable expense ratio
variable expenses/sales
break even for multiple products
fixed expenses / overall CM ratio
increase in net operating
CM per unit x increase in unit sales
incremental contribution margin
increased sales x CM ratio - increased advertising cost = increase in monthly NOI
dollar sales for company with traceable fixed expenses to break even
traceable fixed expenses + common fixed expenses / overall CM ratio
break even point for a business segment
dollar sales for a segment to break even = segment traceable fixed expenses/segment CM ratio
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