acc406 CH.4 Flashcards
1
Q
BREAK EVEN IS WHEN:
A
CM = Total Fixed cost
2
Q
Break-even in #
A
FIXED COST /CM PER #
3
Q
Break-even in $
A
FIXED COST/CM RATIO
4
Q
Margin of safety #=
A
SALE # - BREAK EVEN #
5
Q
Margin of safety $ =
A
SALES$ - BREAK EVEN$
6
Q
units to Target Income (TI) =
A
(FC + TI)/CM per unit
7
Q
$ to TI =
A
(FC + TI)/ (CM ratio)
8
Q
Degree of operating leverage (DOL)
A
CM/Operating income
9
Q
% change in operating leverage
A
DOL x % change in sales
10
Q
Expected operating income
A
Original operating income + (% change x Original operating income)
11
Q
VC ratio =
A
VC per unit/Price
12
Q
CM ratio =
A
(Sales - VC)/Price
