Formulas

Question 1

Revenue function

Answer 1

Total revenue = quantity x price + fixed revenue

Question 2

Unit contribution margin

Answer 2

UCM = selling price per unit - variable cost per unit

Question 3

Contribution margin ratio

Answer 3

CMR = (revenue - variable cost)/revenue

Question 4

Contribution margin

Answer 4

CM = revenue - quantity x unit cost

Question 5

Break even volume

Answer 5

Quantity = fixed cost/UCM

Question 6

Break even revenue

Answer 6

Revenue = fixed cost/CMR

Question 7

Margin of safety

Answer 7

MS = Period revenue - break even revenue

Question 8

Margin of safety (MSR)

Answer 8

MSR = margin of safety/revenue

Question 9

Operating income using UCM

Answer 9

OI = column sold of product x UCM - fixed cost

Question 10

Volume of target profit points

Answer 10

Q = (FC + OI)/UCM

Question 11

Revenue target profit points

Answer 11

R = (FC + OI)/CMR

Question 12

Weighted average unit contribution margin (WUCM)

Answer 12

WUCM = % of total sales volume due to product d x UCM

Question 13

Degree of operating leverage

Answer 13

OL = (Change in operating income/change in revenue)

Question 14

Operating income using CMR

Answer 14

OI = Revenue x CMR - FC