ADMS 2510 Lecture Notes - Lecture 6: Contribution Margin, Earnings Before Interest And Taxes, Income Statement

• School: York University
• Department: Administrative Studies
• Course: ADMS 2510
• Professor: steph

Document Summary

9-37 cvp analysis; strategy (45-50 min: be units = f (p v(cid:895) = (cid:1004)(cid:1004),(cid:1004)(cid:1004)(cid:1004) (cid:894)(cid:1004) (cid:1009)(cid:895) per u(cid:374)it = 20,000 units. Be ($) = f cmr = f [(p v) / p] = (cid:1004)(cid:1004),(cid:1004)(cid:1004)(cid:1004) [(cid:894)(cid:1004) (cid:1009)(cid:895) / (cid:1004)] = [22000 (cid:894)co(cid:374)tri(cid:271)utio(cid:374) (cid:373)argi(cid:374) per u(cid:374)it(cid:895)] f. = [(cid:1006)(cid:1006),(cid:1004)(cid:1004)(cid:1004) u(cid:374)its (cid:894)(cid:1004) (cid:1009)(cid:895)/u(cid:374)it] (cid:1004)(cid:1004),(cid:1004)(cid:1004)(cid:1004) ,000: margin of safety (mos) = budgeted sales volume be sales volume. Mos ratio = mos / budgeted sales volume. Both the mos and the mos ratio refer to the extent to which sales could fall before losses are realized. In this sense, they are rough measures of operating risk and are therefore helpful in addressing inherent uncertainty in the profit-planning process: be units = f / contribution margin per unit. = (cid:894)(cid:1004)(cid:1004),(cid:1004)(cid:1004)(cid:1004) + (cid:1009)(cid:1011),(cid:1004)(cid:1004)(cid:1004)(cid:895) / (cid:894)(cid:1004). (cid:1004)(cid:1004) (cid:1007). (cid:1009)(cid:1004)(cid:895) per u(cid:374)it. B= ales (cid:448)aria(cid:271)le (cid:272)osts fi(cid:454)ed (cid:272)osts. = [q (cid:894)u(cid:374)it (cid:272)o(cid:374)tri(cid:271)utio(cid:374) (cid:373)argi(cid:374)(cid:895)] f. = [22,000 units (. 00 (cid:1007). (cid:1009)(cid:1004)*(cid:895)/u(cid:374)it] (cid:894)(cid:1004)(cid:1004),(cid:1004)(cid:1004)(cid:1004) + (cid:1009)(cid:1011),(cid:1004)(cid:1004)(cid:1004)(cid:895)