Accounting 102 exam 2

second midterm on chapters 5,6,7,8

To obtain the dollar sales volume necessary to attain a given target profit

(Fixed expenses + Target net profit) ÷ Contribution margin ratio

Contribution Margin (CM)

CM=Sales−Variable Expenses

CM per unit

CM per unit= selling price- variable cost per unit

CM Ratio

CM ratio = CM/Sales

break even in units

break even unites= fixed expenses/ cm per unit

break even in dollar sales

break even sales= fixed expenses/ cm ratio

units needed for target profit

units= fixed expenses + target profit/ cm per unit

sales dollars for target profit

sales= fixed expenses + target profit/ cm ratio

net operating income

net operating income= cm - fixed expenses

degree of operating leverage

DOL= CM/ NOI

variable

per unit

fixed

total

break even the CM will be the

fixed cost