Forecasting & Projection (B2)

Question 1

How do you calculate contribution margin ratio?

Answer 1

Contribution margin ratio = Contribution margin / Revenue

Question 2

How do you calculate the break-even point in units?

Answer 2

Break-even point in units = Total fixed costs / Contribution margin per unit

Question 3

How do you calculate contribution margin per unit?

Answer 3

Contribution margin per unit = Sales price per unit - variable cost per unit

Question 4

How do you calculate the break-even point in dollars?

Answer 4

Break-even point in dollars = Total fixed costs / Contribution margin ratio

Question 5

How do you calculate required sales volume for target profit?

Answer 5

Sales = Variable costs + (Fixed costs + Net income before taxes)

OR

Sales = Fixed cost + EBT Profit / Contribution margin ratio or per unit

Question 6

How do you calculate target profit before tax?

Answer 6

Target profit before tax = Target profit after tax + Tax

OR

Target profit before tax = Target profit after tax / (1 - tax rate)

Question 7

How do you calculate the break-even point in sales for target profit?

Answer 7

Sales = Variable costs + Fixed costs + Target profit before taxes

Question 8

How do you calculate before tax income?

Answer 8

Net income before tax - tax = Net income after tax

Question 9

How do you calculate number of units to achieve a given net income before tax?

Answer 9

Sales - Variable cost - Fixed cost = Net income before tax

Question 10

What is the best transfer pricing model based on?

Answer 10

Market price

Question 11

How do you calculate units sold?

Answer 11

Units sold = CM per unit x Units

Question 12

How do you calculate the simple linear regression model?

Answer 12

Regression Analysis = Total Cost “DV” = Total FC “y-intercept” + (VC per unit “Slope” + Volume “IV”)

y = A + Bx

y = TC
x = Volume
A = Fixed cost
B = VC per unit