CVP Analysis

Question 1

Contribution Margin/unit

Answer 1

= unit selling - unit variable
or
= total CM/ Units sold

Question 2

Contribution Margin Ratio

Answer 2

= contribution margin per unit / unit selling price
or
= total CM/ Total sales

Question 3

Variable Cost Ratio

Answer 3

= Variable cost per unit / unit selling price
or
= total VC/total sales

Question 4

Break Even ($)

Answer 4

= total fixed costs ($) / contribution ratio

Question 5

Break Even Units

Answer 5

= total fixed costs ($) / contribution margin per unit

Question 6

Break-even units multiple products

Answer 6

= total fixed costs ($) / Weighted average contribution margin per unit

Question 7

Net income before taxes

Answer 7

= Net income after tax / (1-tax rate)

Question 8

Required sales

Answer 8

= (FC + target NIBT) / CM ratio

Question 9

Degree of Operating leverage

Answer 9

= contribution margin / net income

Question 10

Percentage change in profits

Answer 10

= degree of operating leverage * Percentage change in sales

Question 11

Margin of Safety ($)

Answer 11

= actual (expected) sales ($) - Break even sale ($)

Question 12

Margin of Safety Ratio

Answer 12

= Margin of Safety ($) / Actual (Expected) sales ($)