Managerial Accounting Traditional vs Contribution Format Income Statements
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Margin of Safety
Actual Sales - BEP Sales = Margin of Safety
Margin of Safety %
Margin Safety / Actual Sales = Margin of Safety %
BEP sales $
Fixed Costs / Contribution Margin % = BEP sales $
BEP units
Fixed costs / Contribution margin (CM) per unit = BEP units
Traditional Income Statement
Sales Revenue - Cost of Goods Sold = Gross Margin - Selling & General and Administrative Expenses = Net Income
Contribution Format Income Statement
Sales Revenue - Variable Costs = Contribution Margin - Fixed Costs = Net Income
BEP
break-even point; the level of sales at which the firm covers all its operating and financial costs; total operating and fixed costs divided by the contribution margin ratio
