Accounting V2

  1. What is the Change in profit formula using Unit CM?
    Change in unit volume * Unit CM = Change in profit
  2. What is the change in profit formula using CM Ratio?
    Change in sales dollars * CM Ratio = Change in profit
  3. What is the formula to calculate how many units a company must sell to break even? What happens at the Break-Even Point?
    • 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
  4. What questions does the Break-even Point answer?
    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.
  5. What is the Target Profit formula and what does it show?
    • Total Fixed Costs + TP = TP
    • Unit CM

    Basically shows how many units must be sold to get the profit that a company desires.
  6. What is Sales mix?
    Sales mix is each product's percentage of total sales
Card Set
Accounting V2