CH 3 Cost-Volume-Profit Analysis Flashcards
1
Q
5 Steps of decision making
A
- Identify the problem
- Obtain Information
- Make predictions
- make decisions
- Implement decisions, evaluate performance
2
Q
total costs are consisting of:
A
fixed and variable costs
3
Q
Operating Income=
A
Oi= Revenue - Variable Costs - Fixed Costs
4
Q
Revenue=
A
Rev= Selling Price x quantity sold
5
Q
Variable costs=
A
Variable costs per unit x quantity sold
6
Q
Contribution Margin (CVP) =
A
CVP= revenue - variable costs
7
Q
Contribution margin per unit=
A
unit selling price - unit variable costs
8
Q
Break Even Point Units
A
Break even= Fixed costs/contribution margin
9
Q
Break Even Revenue=
A
Fixed Costs/Contribution margin percentage
10
Q
Margin of Safety is an….
=
A
MOS= Budgeted sales - BE sales
Indicator of risk
11
Q
Operating leverage (OL)=
A
OL=Contribution Margin/Operating Income
