Cost-Volume-Profit Analysis

Question 1

Study of the effects of changes in costs and volume on a company’s profits.

Answer 1

Cost-Volume-Profit Analysis

Question 2

Contribution Margin per Unit

Answer 2

Unit Selling Price
( Unit Variable Costs )
——————————-
CM per Unit

Question 3

Contribution Margin Ratio

Answer 3

CM per Unit / Unit Selling Price

Question 4

The company will realize no income but suffer no loss.

Answer 4

Break-even point

Question 5

Break-even point in units

Answer 5

Fixed Costs / CM per Unit

Question 6

Break-even point in Peso

Answer 6

Fixed Costs / CM ratio
or
Total Variable Cost + Total Fixed Cost

Question 7

Required Sales in Peso

Answer 7

( Fixed Costs + Target Net Income ) / CM ratio

Question 8

Required Sales

Answer 8

Variable Costs + Fixed Costs + Target Net Income

Question 9

Margin Of Safety

Answer 9

Difference between actual sales and break-even sales

Question 10

Sales Mix

Answer 10

is the relative proportion in which each product is sold when a company sells more than one product.

Question 11

Weighted Ave. CM

Answer 11

( A’s Unit CM x A’s % of sales) + ( B’s Unit CM x B’s % of sales)

Question 12

Margin of Safety

Answer 12

Sales - Breakeven Sales

Question 13

Margin of Safety Ratio

Answer 13

Margin of Safety / Sales

Question 14

Degree of Operating Leverage (DOL)

Answer 14

CM / Profit before Tax