Kelsey Gorshe Quiz 1 Contribution Margin=Contribution margin per unit X # of units sold Contribution margin per unit= selling price per unit - variable cost per unit Gross Margin=Revenues - Cost of goods sold Variable Costs: Change in total in proportion to changes in the related level of total activity or volume. Inventoriable Costs: all costs of a product that are considered as assets in the balance sheet when they are incurred and that become cost of goods sold only when the product is sold. Break Even # of units= Fixed Costs/Contribution margin per unit Break Even Revenues= Fixed Costs/ Contribution margin % Contribution margin %= Contribution margin per unit/selling price Target net Income= (Target operating income)-(Target operating income X Tax Rate) Target Operating Income=Target net Income/1-tax rate Margin of safety=actual revenues exceeds breakeven revenues # of units required to be sold=Fixed Costs + Target operating income/Contribution margin per unit Strategic Triangle: Quality, Cost, Time
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