Chapter_4_Relationships

Chapter_4_Relationships - Chapter 4 Relationship Examples...

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Chapter 4 Relationship Examples 1. B.E. units = F.E. / C.M. per unit Why? 2. @BE, Contr. Margin = Fixed Expense (which stay fixed for all levels) 3. @Actual Sales Level, C.M. = F.E. + Profit 4. C.M. Ratio = C.M. / Sales (same for all sales levels because variable) 5. C.M. per unit = C.M. / #units 6. C.M. per unit = Sales per unit – Var. Costs per unit 7. Selling commissions which are calculated as a % of sales are var. cost 8. C.M. Ratio = 1 – Variable Cost Ratio = 1 – (total Variable Costs / Sales) 9. C.M. Ratio = 1 – (Var. Cost per unit / Sales per unit) 10. B.E. Sales($) = F.E. / C.M. Ratio OR Why? = B.E. units x Selling Price per unit 11. Margin of Safety = Actual (Budgeted) Sales – BE Sales 12. Sales per unit – Var. Costs per unit = C.M. per unit 13. Sales per unit = C.M. per unit + Var. Costs per unit 14. Sales = (Sales per unit) x (# of units) 15. Var. Costs = (Var. Costs per unit) x (# of units) 16. C.M. = (C.M. per unit) x (# of units) 17. Target Profit ~ same approach as B.E. calcs except C.M. = F.E. + T.P.
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Chapter_4_Relationships - Chapter 4 Relationship Examples...

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