managerial acounting chapter 4.docx

managerial acounting chapter 4.docx - Important Formulas 1...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Important Formulas: 1. Contribution Margin Sales – Variable costs (VC) = Contribution Margin (CM) 2. Contribution Margin Ratio CM / Sales = CM ratio 3. Breakeven point – where net income is zero Total Revenues - Total Costs Zero Profit How to calculate Break Even (BE): BE in units = Total Fixed Costs / Contribution Margin per unit BE in sales dollars = BE in units * Selling Price per unit See examples on Chapter 4 PowerPoints and in the practice problems. 4. Contribution Margin Sales - V.C. (includes Variable Product costs & Variable Selling / Administrative)
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
CM - F.C. (Fixed MOH & Fixed Selling / Administrative) Net Income 5. Determine how many units to sell to get a targeted profit (or net income). If you company desires a certain net income, you can adjust the BE formula to follows: (Total Fixed Costs + Desired Net Income) / CM per unit = units to sell to get desired profit. 6. Cost – Volume – Profit Graph Assume the following information: Max number of units you can sell is 100 at $10 each (sells would be $1,000 total) Variable cost is $3 per unit Fixed costs are $300 Therefore, if you sold all 100 units, total costs would be: F.C. $300
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern