Formulae

Question 1

Contribution Margin Ratio

Answer 1

Contribution Margin ÷ Sales

Question 2

Break-even point (units sold)

Answer 2

Fixed Expenses ÷ Unit Contribution Margin

Question 3

Break-even point (total sales dollars)

Answer 3

Fixed Expenses ÷ CM Ratio

Question 4

Units sold to attain target profit

Answer 4

(Fixed Expenses + Target Profit) ÷ Unit Contribution Margin

Question 5

Before-tax income

Answer 5

After-tax income ÷ (1 - t)

Question 6

Margin of safety

Answer 6

Total budgeted or actual sales – Break-even sales

Question 7

Margin of safety percentage

Answer 7

Margin of safety in dollars ÷ Total budgeted or actual sales

Question 8

Degree of operating leverage

Answer 8

Contribution margin ÷ Net income

Question 9

Contribution margin

Answer 9

Sales revenue – Variable costs

Question 10

Net operating income (contribution margin)

Answer 10

Contribution margin – Fixed costs

Question 11

Gross margin

Answer 11

Sales revenue – COGS

Question 12

Net operating income (absorption costing)

Answer 12

Gross margin – Selling and admin costs

Question 13

Profits

Answer 13

Sales(Q) – [Variable expenses(Q) + Fixed expenses]

Question 14

Sales(Q)

Answer 14

Variable expenses(Q) + Fixed expenses + Profits

Question 15

Variable cost

Answer 15

Change in cost ÷ Change in activity

Question 16

Fixed cost

Answer 16

Total cost - Total variable cost

Question 17

Cost equation

Answer 17

Total fixed cost + (Variable cost per unit of activity × Level of activity)

Question 18

Activity rate

Answer 18

Cost ÷ Allocation base

Question 19

Total product cost

Answer 19

DM + DL + MOH

Question 20

Predetermined MOH

Answer 20

Estimated MOH ÷ Estimated DLH

Question 21

Unit product cost

Answer 21

Total applied overhead ÷ Number of units processed

Question 22

Break-even point (equation)

Answer 22

Total revenue – Total costs = 0
Solve for X

Question 23

Contribution margin per unit

Answer 23

Price per unit – Variable cost per unit

OR

CM ratio x Price per unit