Formulae Flashcards
Contribution Margin Ratio
Contribution Margin ÷ Sales
Break-even point (units sold)
Fixed Expenses ÷ Unit Contribution Margin
Break-even point (total sales dollars)
Fixed Expenses ÷ CM Ratio
Units sold to attain target profit
(Fixed Expenses + Target Profit) ÷ Unit Contribution Margin
Before-tax income
After-tax income ÷ (1 - t)
Margin of safety
Total budgeted or actual sales – Break-even sales
Margin of safety percentage
Margin of safety in dollars ÷ Total budgeted or actual sales
Degree of operating leverage
Contribution margin ÷ Net income
Contribution margin
Sales revenue – Variable costs
Net operating income (contribution margin)
Contribution margin – Fixed costs
Gross margin
Sales revenue – COGS
Net operating income (absorption costing)
Gross margin – Selling and admin costs
Profits
Sales(Q) – [Variable expenses(Q) + Fixed expenses]
Sales(Q)
Variable expenses(Q) + Fixed expenses + Profits
Variable cost
Change in cost ÷ Change in activity
Fixed cost
Total cost - Total variable cost
Cost equation
Total fixed cost + (Variable cost per unit of activity × Level of activity)
Activity rate
Cost ÷ Allocation base
Total product cost
DM + DL + MOH
Predetermined MOH
Estimated MOH ÷ Estimated DLH
Unit product cost
Total applied overhead ÷ Number of units processed
Break-even point (equation)
Total revenue – Total costs = 0
Solve for X
Contribution margin per unit
Price per unit – Variable cost per unit
OR
CM ratio x Price per unit
