Principles of Accounting II



Principles of Accounting II

Chapter 22

CVP Formulas

Contribution Margin per Unit

Sales Price per Unit – Total Variable Cost per Unit

Contribution Margin Ratio

Contribution Margin/Sales Price

Break-even point in Units

Total Fixed Costs/Contribution Margin per Unit

Break-even point in Dollars

Total Fixed Costs/Contribution Margin Ratio

Pretax Income (when given after-tax income only)

After-tax Income/(1 – tax rate)

Dollar Sales at Target After-Tax Income

(Fixed Costs + Target Pretax Income)/Contribution Margin Ratio

OR

(Fixed Costs + Target After-tax Income + Income Taxes)/Contribution Marg Ratio

Unit Sales at Target After-tax Income

(Fixed Costs + Target Pretax Income)/Contribution Margin per Unit

OR

(Fixed Costs + Target After-tax Income + Income Taxes)/Cont Margin per Unit

Margin of Safety (percent)

Expected Sales – Break-even Sales/Expected Sales

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