Chapter 3 - Cost-Volume-Profit Analysis

Question 1

Operating Income

Answer 1

Revenue - Variable Costs - Fixed Costs

Question 2

Revenue

Answer 2

Selling Price x Quantity Sold

Question 3

Variable Costs

Answer 3

Variable Cost Per Unit x Quantity Sold

Question 4

Contribution Margin Per Unit

Answer 4

Selling Price (SP) - Variable Cost Per Unit (VCU)

Question 5

Contribution Margin %

Answer 5

Contribution Margin Per Unit / SP

Question 6

Contribution Margin (CM)

Answer 6

Revenue - Variable Cost (VC)

Question 7

Break Even (BE)

Answer 7

Total Revenue = Total Costs; Revenue - VC - FC = 0

Question 8

Break Even Number of Units (BEQ)

Answer 8

FC / CM per unit

Question 9

Break Even Revenue (BE$)

Answer 9

BE x SP or FC / CM%

Question 10

Quantity of Units to Be Sold to Earn Target Operating Income (OI)

Answer 10

(FC + Target OI) / CM per unit

Question 11

Revenue Needed to Earn Target OI

Answer 11

(FC + Target OI) / CM%

Question 12

Target (before-tax) OI

Answer 12

Target (after-tax) Net Income / 1 - Tax Rate

Question 13

Operating Leverage

Answer 13

Contribution Margin (CM) / Operating Income (OI)