Module+5000+XVI.+Formulas

XVI. Module 5000 Formulas MJH Contribution-Margin-Based Income Statement CWR

Variable product cost per unit = Direct materials + Direct Labor + Variable overhead

Selling expense per unit = price*commission % e.g.: $400.00 * 5%= $20.00

Total variable cost per unit = Direct materials + Direct Labor + Variable overhead + Variable selling expense

Contribution margin per unit = Price – Variable cost per unit

Contribution margin ratio = (Price – Variable cost per unit)/Price

Total fixed expense= Total fixed overhead + Admin expense Totals

Break-even units = Total fixed costs/(Price-unit variable cost)

Sales revenue = Price*units sold

Operating Income = (price*units)-(Unit variable costs*units)-fixed expenses

Variable cost ratio = 1. Total variable cost/sales or 2. Unit variable cost/price

Break-even point in sales revenue = 1. Fixed cost/contribution margin ratio or 2. Fixed cost/(1-variable cost ratio)

Margin of Safety = 1. Sales – Breakeven sales 2. Units sold – break-even units

Degree of operating leverage = Total contribution margin/Operating income

Percent change in operating income = Degree of operating leverage*percent change in sales