222 exam 2 formulas

Question 1

Contribution margin ratio

Answer 1

= (unit sale price-variable cost)/unit sale price

(the resulting percentage will be the contribution margin)

Question 2

Variable Expense Ratio

Answer 2

= (total variable expenses/total sales) *100

or

Variable Expense Ratio = (variable expense per unit/selling price)*100

(comes out as a percentage)

Question 3

(Formula method) break even point in units

Answer 3

= fixed expenses/contribution margin per unit

Question 4

Break even point in sales dollars

Answer 4

= total fixed expenses / contribution margin ratio

Question 5

Break even price

Answer 5

= (total fixed cost/volume of production) +variable cost per unit

Question 6

Percent of change

Answer 6

= ((Y2-Y1)/Y1)*100

Question 7

Margin of safety in dollars

Answer 7

= Total sales - Break-even sales

Question 8

Margin of safety as a percentage

Answer 8

= margin of safety/total sales

Question 9

Margin of safety in units

Answer 9

= margin of safety/total units sold

Question 10

Degree of operating leverage

Answer 10

= CM/net operating income