All formulas Flashcards
Operating income before tax
SPx - VCx - FC = P
Contribution margin (units)
SP-VC/ CM
Contribution margin ratio
CM/ SP
Breakeven in units
FC/CM
Breakeven in sales dollars
FC/CMR
Breakeven math in units and dollars
SPx = VCx + FC (solve for x) = units
Multiply units by SP/ unit = $
Target Operating Income before tax in units
FC + P /CM
Target Operating Income before tax in sales dollars
FC + P / CMR
Target operating income before tax using math
VCx FC + Target OI = units required
SPx = VCx + FC = P $
Target operating income after tax - units
FC + (Proft after tax / (1-tax rate) / CM
Target operating income after tax $
FC + (Proft after tax / (1-tax rate) / CMR
Target operating income after tax in units using math
SPX = VCx + FC + (profit / (1-tax rate))
Target operating income after tax in dollars using math
FC + (target profit / (1-tax rate)) / CMR
Margin of safety in dollars
actual(expected) sales - Breakeven sales
Margin of safety %
actual (expected) sales - breakeven sales / actual expected sales
true or false
CM at breakeven point are equal
true
how do you figure out what CM if variable costs are 55% of sales
CM = (1 - 55%)
= .45
How do you figure out what CMR is if variable costs are 55% of sales
CMR = (1-55%) / 1
= 45%
How do you calculate sales mix
Units for product 1 / total units
units for product 2 / total units
How do you calculate CM using weighted average
(unit CM x sales mix %) + (unit CM x sales mix %) = weight avg. unit CM
how do you calculate breakeven point in units using weight average
FC / Weighted average unit CM = BE units
how do you calculate the BE point in units for each product using weighted average
total BE units x sales mix % for each product
how do you calculate the BE point in dollars for each product using weighted average
CM for each unit x the BE in units for each product
total units say is 1,000
CM for product 1 is 200
sales mix % is 75%
1000 x 75% = 750 units (be units)
200 x 750 = $150,000
do for each product
total cm in dollars using weight average
total be point for each product in sales dollars added up
this is also called the fixed cost
How do you calculate be point sales dollars using weighted average
(CMR for each product x sales mix) + (CMR for each product x sales mix) = weight avg CMR
be in $
FC / Weighted avg CMR = BE in dollars
How do you calculate degree of operating leverage
(CM per unit x units)/ operating income
how do you calculate decrease in sales of say 10%
10% x degree of operating leverage = decrease % or
operating income x % of decrease = $ decrease
