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Variable Cost Behavior When Activity: When Activity:
Increases Decreases
Total Variable Cost Increases Decreases
Variable Cost/ Unit Stays Same Stays Same
Fixed Cost Behavior When Activity When
Activity
Increases Decreases
Total Fixed Cost Stays Same Stays Same
Fixed Cost per Unit Decreases Increases
Contribution Margin = Revenue - Variable Costs
Average Cost per Unit = Total Cost / Number of Units
Magnitude of = Contribution Margin
Operating Leverage Net Income
Break even volume in units= Fixed Cost / CM per unit ©¦ ~Contribution Margin Ratio= CM / Sales ©¦ ~Break Even Point= Fixed Cost / CM Ratio or Selling Price/Units*# Units Sold = [(VC/Unit*# Unit Sold) + Fixed Cost] ©¦ ~To find how many units must be sold: Fixed Cost + Target Profit/ CM ©¦ ~Profit= CM ¨C FC ©¦ ~Margin of Safety= (Budgeted Sales ¨C Break Even Sales)/ Budgeted Sales......
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Title: Accounting Review Sheet
Approximate Word Count: 3350
Approximate Pages: 14 (250 words per double-spaced page)
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