Chapter 4

Question 1

CM ratio

Answer 1

CM per unit / selling price per unit

Question 2

Break even unit sales

Answer 2

Fixed Costs / CM per unit

Question 3

Break even sales dollars

Answer 3

Fixed Cost / CM ratio

Question 4

Margin of safety in sales dollars

Answer 4

Total sales $ - breakeven sales dollars

Question 5

Margin of safety in units 

Answer 5

Unit sales - unit breakeven sales

Question 6

Margin of safety ratio

Answer 6

Margin of safety / sales

Or

Safety margin in units / sales units

Question 7

Unit sales

Answer 7

Fixed cost + target operating profit / CM per unit

Question 8

Sales dollars

Answer 8

Fixed costs + target, operating profit / CM ratio

Question 9

Unit sales with tax

Answer 9

Fixed costs + target after tax operating profit / (1-t). / CM per unit

Question 10

Sales with tax

Answer 10

Fixed costs + target after tax operating profit / (1-t). / CM ratio

Question 11

Degree of operating leverage

Answer 11

CM / pretax, operating income

Question 12

How can u find the number of units sold

Answer 12

CM per unit/CM ratio = price per unit

Sales/PPU= # of units

Question 13

Predetermined overhead rate

Answer 13

Estimated total manufacturing overhead cost for the coming period
/
Estimated total units in the allocated base for the coming period

Question 14

MOH applied

Answer 14

POHR x Actual Activity

Question 15

Degree of operating leverage application

Answer 15

Percentage change in pretax operating profit = DOL x % change in sales

High DOL means that most of your costs are fixed so you’ll do