Chp 5 ACBU

Once the break-even point has been reached, net operating income will increase by the amount of the _____ for each additional unit sold.

unit contribution margin

Profit Equation

(P x Q - V x Q) - FE

contribution format income statement

Profit = (Sales - Variable Expenses) - Fixed Expenses

Contribution Margin

The amount remaining from sales revenues after all variable expenses have been deducted. so, it is the amount available to cover fixed expenses and then to provide profits for the period

variable expenses equation

VE = VE per unit X Q sold = V x Q

If sales are zero the company's loss would equal

its fixed expenses

Sales Equation

sales = selling price per unit X quantity sold = P x Q