★ Lecutre 14 - Recitation 4 / MockUp-Exam Flashcards
Contribution Margin,
general explaination (2)
- seperates ..
- usefull for ..
-
separate a company’s costs (COGS, SG&A)
into variable & fixed categories. - useful for analyzing the profitability
of individual products or services.
Contribution Margin Income Statement format
Sales Revenue
− Variable Costs
= Contribution Margin
− Fixed Costs
———— Net Profit / Loss ————
= Operating Income (before Tax)
− Income Tax
= Operating Income (after Tax)
Sales Revenue Formula
Total Variable Costs
Total Variable Costs = Number of Customers × Variable Cost per Customer
Contribution Margin
Contribution Margin = Sales Revenue − Variable Costs
Net Operating Income Formula (3)
- basic
- different types
Profit = Revenue - Expense
eg. further break down the total expenses
- gross profit margin
- contribution margin
→ | Expense => (COGS + SG&A) ; Fix or Variable ; to calculate the
Break-Even point (units)
Break-Even point (units) =
Fixed Costs / Contribution Margin per Unit
Margin of Safety
(units)
Margin of Safety (units) = Actual Sales - Break-Even Point (units)
The margin of safety is the difference between actual sales and the break-even point. It represents the number of units or dollars by which the current sales exceed the break-even sales.
Required Sales in Units to Achieve a Target Net Income (Unit sales required for a monthly after-tax profit of $X)
Unit Sales, Required = (Target Profit + Fixed Costs + Taxes) / (Contribution Margin, per Unit)
Current Monthly Profits Formular
Current Monthly Profits = Total Revenue − (Total Variable Costs − Fixed Costs)
→ R = QP - (QV - F)
- Total Revenue = Unit Selling Price × Current Sales Volume
- Total Variable Costs = Variable Costs per Unit × Current Sales Volume
- Fixed Costs
What is the content of the Contribution Income Statement? (4)
What is the content of the
Functional Income Statement? (2)
The natural classification of expenses involves categories such as salaries, rent, supplies, and travel.
Break-Even Analysis:
Break-Even Unit Sales Volume (2)
Profit (befor tax) = Revenues * X - Expenses (Fix + Variable * X)
Break-Even Unit Sales Volume
= Fixed Costs / (Selling Price per Unit - Variable Costs per Unit)
Target Unit Sales Volume
Before-tax profit
Break-Even Point
Target Sales Volume
Target Sales Volume = (Total Fixed Costs + Target Profit) / (Selling Price per Unit - Variable Cost per Unit)
Total liabilities
Assets = Liabilities + Stockholders’ Equity
=> Liabilities = Assets − Stockholders’ Equity
How to claculate cash from financing activities?
The statement of cash flows is divided into three sections:
- operating activities,
- investing activities,
- financing activities.
The formula for the change in cash is:
Change in Cash = Cash from OA + Cash from IA + Cash from FA
=> Cash from IA = Change in Cash - Cash from FA - Cash from OA