Chapter 5 Flashcards
1
Q
Contribution Margin CM
A
Amount of sales revenue available to cover Fixed Costs FC and profits after covering Variable Costs VC
2
Q
Contribution Margin RATIO
A
% change in contribution margin thus profit from change in sales
CM per Unit/ Price per Unit
Total CM/ Total Sales
3
Q
Break Even
A
Units: CM per Unit/ Price per Unit
$$$: Total CM/ Total Sales
4
Q
Target Net Profit
A
Sales - VC- FC= 0
Units: FC/ CM per Unit
$$$: FC/ CM Ratio
