M. A. Important Formulas

Question 1

Contribution margin

Answer 1

Sales Revenue - VC

-> Assumed to be constant

Question 2

Standard contribution margin

Answer 2

Sales - VC - total fixed overheads/unit

Question 3

Breakeven point

Answer 3

FC / Contribution per unit

Question 4

Contribution per unit

Answer 4

Selling price - VC

Question 5

Unit sold for target profit

Answer 5

(FC + Target profit) / Contribution per unit

Question 6

Profit

Answer 6

Total contribution - FC

or: Sales revenue - FC - VC

Question 7

Selling price

Answer 7

Required sales revenue / sales volume

Question 8

Profit-volume ratio or contribution margin ratio

Answer 8

Contribution / Sales

Question 9

Margin of safety

Answer 9

For units: Current sales - Breakeven point

For %: (Expected sales - Breakeven point) / expected sales

Question 10

Calculate overhead costs

Answer 10

include everything except of direct labour and material costs

Question 11

Overhead absorption rate

Answer 11

Fixed overheads / denominator level (activity level)

Question 12

Total income

Answer 12

Current income - costs

Question 13

Completed units

Answer 13

-Beginning + Input + Ending

Question 14

Degree of operating leverage

Answer 14

Contribution margin / profit

Question 15

Budgeted Quantities

-> Same for material purchase budget

Answer 15

• Beginning In. + Forecast In. + Ending In.

Question 16

Budgeted profit

Answer 16

Budgeted revenue - Budgeted expenses