Accounting V2

Change in unit volume * Unit CM = Change in profit

Change in sales dollars * CM Ratio = Change in profit

• Total Fixed Costs
• Unit CM

• At the break-even point: 
• 1. Total Revenues = Total Expenses
• 2. Contribution Margin = Fixed Costs
• 3. Income from Operations = $0

1. How many units a company must sell to become Profitable.

2. How far sales can fall before the company becomes unprofitable.

3. If the company changes it's selling price, it's variable costs, or it's fixed costs how profit will be affected.

• Total Fixed Costs + TP = TP
• Unit CM

Basically shows how many units must be sold to get the profit that a company desires.

Sales mix is each product's percentage of total sales