Cost-Volume-Profit Analysis Flashcards
Profit
Profit = (Sales - Variable Expenses) - Fixed Expenses
Profit = (P x Q - V x Q) - Fixed Expenses
Profit = Unit CM x Q - Fixed Expenses
Sales
Selling Price per Unit x Quantity Sold
P x Q
Variable Expenses
Variable Expenses per Unit x Quantity Sold
V x Q
Unit Contribution Margin (Unit MC)
Selling Price per Unit - Variable Expenses per Unit
P - V
Unit Sales to Attain Target Profit
Target Profit + Fixed Expenses / CM per Unit
Contribution Margin Ratio or Percentage (CM Ratio)
Contribution Margin / Sales
Sales - Variable Expenses / Sales
1 - Variable Expense Ratio
Change in Contribution Margin
CM Ratio x Change in Sales
Variable Expense Ratio
Variable Expenses / Sales
Equation Method to Attain the Target Profit
Profit = Unit CM x Q - Fixed Expenses
Dollar Sales to Attain the Target Profit
Targe Profit + Fixed Expenses^3 / CM Ratio
Unit Sales to Break Even
Fixed Expenses / Unit CM
Dollar Sales to Break Even
Fixed Expenses / CM Ratio
Margin of Safety in Dollars
Total Budgeted (or actual) Sales - Break-Even Sales
Degree of Operating Leverage
Contribution Margin / Net Operating Income
Margin of Safety Percentage
Margin of Safety in Dollars / Total Budgeted (or actual) Sales in Dollars
