MGT 11B Chapter Notes - Chapter 5: Earnings Before Interest And Taxes, Operating Leverage
Document Summary
Cm ratio of 40% = ,000: net operating income will also increase by ,000 if fixed costs do not change, relation between profit and cm ratio can be expressed as: Break-even and target profit analysis: break-even analysis - 2 approaches, 350 speakers x per speaker = ,500 in total sales, 1. Use the equation method to compute the break-even point in dollar sales: 2. Use the formula method to compute the dollar sales needed to break even: target profit analysis - 2 approaches, estimating what sales volume is needed to achieve a specific target profit (ex: ,000 per month: equation method, formula method, target profit analysis in terms of dollar sales, 750 speakers x per speaker = ,500 in total sales, 1. Use equation method to compute the dollar sales needed to attain target profit: 2. If sales increase by 10%, we can expect.
