chapter 4

Question 1

contribution margin ratio

Answer 1

contribtuon margin per unit / selling price per unit
gives %

Question 2

contribution margin

Answer 2

sales - variable expenses

Question 3

break even equation method

Answer 3

sales = fixed expenses + variable + profits

or

profits = sales - ( variable + fixed expenses)

Question 4

breakeven CM method in units sold

Answer 4

B/E in units sold = fixed expenses / unit CM

Question 5

b/e CM method in total sales dollars

Answer 5

= fixed expenses / CM ratio

Question 6

target operating profit in units sold

Answer 6

= fixed expesnes + target op profit / unit contribution margin

Question 7

target operating profit in dollar sales

Answer 7

= fixed expenses + target op profit / CM ratio

Question 8

margin of safety equation

Answer 8

= total sales - breakeven sales

Question 9

margin of safety % equation

Answer 9

= margin of safety dollars / total sales

Question 10

operating leverage equation

Answer 10

= contribution margin / op income

Question 11

net income increase with operating leverage

Answer 11

= percent increase in sales x op leverage

Question 12

weighted average contribution margin for units

Answer 12

= (unit cM product 1 x sales mix % product 1) + ( Unit cM product 2 x sales mix % 2)

Question 13

sales mix breakeven in units

Answer 13

= fixed costs / weighted avg unit cm

Question 14

weighted average contribution margin for dollars

Answer 14

( CM ratio x sales mix % 1 ) + ( CM ratio 2 x sales mix % 2)

Question 15

breakeven for sales mix in dollars

Answer 15

= fixed costs / WACM