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6 Cards in this Set
- Front
- Back
Cost volume profit review, Sales Mix, Cost Structure & Operating Leverage
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Review
Basic concepts Basic computations Changes in the business environment Sales Mix Break even sales in units Break even sales in dollars Sales Mix with limited resources Cost Structure & Operating Leverage Effect on Contribution margin ratio Break even point Margin of safety Operating Leverage |
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Contribution Margin
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Contribution margin = sales - variable costs
Contribution margin per unit = (sales/#of units) - (variable costs/#of units) |
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Break even analysis
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Break even point in units = fixed costs / contribution margin per unit($XXX)
Break even point In dollars = fixed costs / contribution margin ratio(0.XX) |
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Target Net Income
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Required sales in units = (fixed costs + target net income) / contribution margin per unit($XXX)
Required sales in dollars = (fixed costs + target net income) / contribution margin ratio(0.XX) |
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Margin of Safety
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How far sales can drop before company will be operating at a loss.
MOS in $ = actual(expected) sales - break even sales MOS ratio = MOS in $/actual(expected) sales |
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Sales Mix
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The relative % in which a company sells it's multiple products. Important as different items have different contribution margins
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