CVP single product Flashcards

1
Q

1) SALES VOLUME

A
  1. Breakeven Sales volume

BES volume = (Total fixed cost)/
(Contribution per unit)

  1. Sales volume to achieve desired profit
    Sales volume = (Total fixed cost + Desired PBT)
    /(Contribution per unit)

Note:
• Total fixed cost includes every fixed cost
• Contribution per unit = Sales price per unit – every variable cost per unit

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2
Q

2) SALES REVENUE

A
  1. Breakeven Sales Revenue
    = (Total fixed cost)/
    (Contribution Margin ratio)
  2. Sales revenue to achieve desired profit
    = (Total fixed cost + Desired PBT)/(Contribution Margin ratio)
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3
Q

Contribute Margin

A

(Sale price per unit – Variable cost per unit)
/Sales price per unit
(OR)
• CM ratio = (Total Sale revenue – Total Variable costs)/ Total sales revenue

Also Called
C/M ratio (Contribution margin ratio)
C/S ratio (Contribution to sales revenue
P/V ratio (Profit volume ratio)

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4
Q

3) MARGIN OF SAFETY

A
  1. Margin of safety units
    MOS (units) = BS units – BES units
    OR
    MOS (Rs.) = BS Revenue – BES Revenue
  2. Margin of safety ratio or margin of safety (%)
    MOS ratio = (BS units – BES units)
    /BS units
    (OR)
    MOS ratio = (BS Revenue – BES Revenue)/BS Revenue
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5
Q

4) SALE PRICE PER UNIT TO EARN DESIRED PROFIT

A

Sale price per unit
= (Total fixed cost + Total variable cost + Desired PBT) ÷ Sales volume

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