Acct Exam 3 Ratios and Formulas

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11 Terms

1
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CM ratio

CM/sales

2
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Profit

CM ratio x sales — fixed expenses

3
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Increase in CM

Increase in sales x CM ratio

4
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Unit sales

(FC + TP)/Unit CM

5
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Sales $

(FC + TP)/CM ratio

6
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Margin of Safety $

Total Sales — Breakeven sales

7
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Margin of safety %

Margin of safety $/Total sales

8
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Degree of operating leverage

CM/Net income

9
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Overall CM ratio

Total CM/Total sales

10
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Breakeven sales

FC/Overall CM ratio

11
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Increase in net income

Degree of Operating leverage x %unit sales increase