# Shared Flashcard Set

## Details

ACG3341 - Ch3
FSU Fennema Exam 1 Summer B
18
Accounting
05/15/2010

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
 The point of zero profit
Term
 How do you calculate breakeven revenues?
Definition
 Fixed Costs Contribution margin %
Term
 How do you calculate breakeven number of units?
Definition
 Fixed costs CM per unit
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
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