Term
What does CVP analysis do? 

Definition
Examines the behavior of total revenues, total costs, and operating income with changes to units sold, selling price, & FC/VC 


Term
What are the 5 steps of CVP analysis? 

Definition
1) Identify problems
2) Obtain information
3) Make predictions
4) Make decisions
5) Implement decisions 


Term
Whats the contribution margin per unit? How is it calculated? 

Definition
How much revenue per sale is left after variable costs per unit
Selling Price  VC per unit 


Term
What's the contribution margin? How is it calculated? 

Definition
How much total revenue is left after variable costs are taken out
# Units Sold x CM per unit
Total Revenues  Total Variable Costs 


Term
What is the contribution margin percentage? How is it calculated? 

Definition
Percentage of revenues left after variable costs are taken out
CM per unit
selling price
Total Contribution Margin
Total Revenue 


Term
What's the margin of safety? 

Definition
The number of units sold after we reach the break even point. 


Term
How do you calculate operating income? 

Definition
Revenues
(Variable costs)
(Fixed costs)
Operating Income 


Term
How are revenues calculated? 

Definition
Selling price x units sold 


Term
How do you calculate Variable costs? 

Definition
(Variable cost per unit)(# units sold) 


Term
How do you calculate operating income using contribution margin per unit? 

Definition
(CMperunit x # sold)  fixed costs 


Term
What is the breakeven point? 

Definition


Term
How do you calculate breakeven revenues? 

Definition
Fixed Costs
Contribution margin % 


Term
How do you calculate breakeven number of units? 

Definition


Term
How do you calculate target operating income? 

Definition
Target Net Income
1  Tax Rate 


Term
How do you calculate Target Net Income? 

Definition
(Target OI) x (1  Tax Rate) 


Term
What's another way to calculate target net income? 

Definition
(Target OI)  (Target OI x Taxrate) 


Term
Whats the difference between gross margin and contribution margin? 

Definition
GM = Rev  CGS
CM = Rev  Variable Costs 


Term
How do you calculate the margin of safety percentage? 

Definition
Margin of Safety in dollars
Actual Revenues 

