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Unformatted text preview: costs. Margin of Safety is the number of units, or the amount of sales dollars, by which budgeted sales exceed breakeven sales. Sensitivity Analysis is a spreadsheet tool used to answer what if questions to assess the sensitivity of profits to simultaneous changes in fixed cost, variable cost, and sales volume. Target pricing strategy focuses on the development of a product with a cost structure that will satisfy market demands. The Equation Method is a technique that uses basic mathematic relationships to help analyze cost-volume-profit relationships. Formulas to Review The breakeven point in units = Fixed Expenses/Contribution Margin per unit The breakeven point in sales dollars = Fixed Expenses/Contribution Margin Ratio Contribution Margin Ratio = Contribution margin/ Sales price Margin of Safety = Budgeted Sales Breakeven Sales/Budgeted Sales...
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- Spring '11