Managerial Accounting Exam 1 formuals – Flashcards
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Profit
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(Sales-Variable Expenses) - Fixed expenses Sales= Selling price per unit * quantity sold Variable expenses= Variable expenses per unit * quantity sold Expressed in Contribution margin: Profit= (Unit cm * quantity sold) - fixed expenses
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Contribution Margin
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Cm ratio: Contribution margin/ sales Cm Ratio: Contribution Margin per unit/ Selling price per unit
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Target Profit analysis in units
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Equation: Profit= (Unit Cm * Quantity) - fixed expenses Profit= desired profit level Formula: Target Profit + fixed expenses/ Cm per unit
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Target Profit Analysis
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Profit= Cm ratio * sales- fixed expenses Profit= desired profit level Formula Target Profit + fixed expenses / CM Ratio
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Break Even Analysis in unites
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Equation: Profit= ( Unit Cm * Q) - Fixed Expenses Profit= Zero formula= Fixed expenses/ cm per unit
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Break even analysis in sales
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Equation: Profit= Cm ration * sales- fixed expenses Profit= zero Formula: Fixed Expenses/ cm ratio
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Margin of Safety In units
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Budgeted (actual) sales in units- break-even in units
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Margin of Safety in Sales
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Budgeted (actual) Sales - Break-even Sales
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Operating Leverage
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Degree of operating leverage= Contribution Margin/ Net Operatin Income
