acct208 exam 1 (Ch 5)
profit =
(selling price per unit x quantity sold) - (variable expense per unit x quantity sold) - fixed expenses
net operating income =
(unit sales - unit sales to breakeven) x unit contribution margin
net operating income =
contribution margin - fixed costs
degree of operating leverage =
contribution margin / net operating income
when constructing a CVP graph, the vertical axis represents
dollars
total contribution margin =
fixed expenses + net operating income
unit sales to breakeven =
fixed expenses / units contribution margin
assumptions of CVP analysis
in multi product companies the sales mix is constant & costs are linear and can be accurately divided into variable and fixed elements
contribution margin =
sales - variable expenses
contribution margin format income statement in order
sales, variable expenses, contribution margin, fixed expenses, net operating income
high low or least squares regression analysis should only be done if a ____ depicts linear cost behavior
scattergraph plot
unit sales to attain the target profit
target profit + fixed expenses / CM per unit
margin of safety
the amount by which sales can drop before losses are incurred
degree of operating leverage
the measure of how a percentage change in sales affects profits at any given level of sales
sales mix
the relative proportions in which a company's products are sold
in a CVP graph, the horizontal axis represents
units