1Finding the Break Even Point in Dollar Sales
1) Find the CM ratio (CM/Sales)
2)Fixed Expenses/CM Ratio
2Finding the Break Even Point in Quantity
Fixed Expenses/Unit CM
3Number of Units Sold to Achieve Target Profit
(Target Profit + Fixed Expenses)/Unit CM
4Variable Costing
Product Costs:
Direct Materials
Direct Labor
Variable MOH
Period Costs:
Fixed MOH
Variable SGA
Fixed SGA
5Absorption Costing
Product Costs:
Direct Materials
Direct Labor
Variable MOH
Fixed MOH
Period Costs:
Variable SGA
Fixed SGA
6NOI Under Variable Costing Structure
Sales
(Less) Variable Expenses (COGS and SGA)
Contribution Margin
(Less) Fixed Expenses (MOH and SGA)
NOI
7NOI Under Absorption Costing Structure
Sales
(Less) COGS
Gross Margin
(Less) SGA (Variable and Fixed)
NOI
8Decrease in Ending Inventory = Release, Increase in Ending Inventory = Defer
Number of Units in Ending Inventory x Fixed MOH/Unit
9Reconciliation
Variable Costing NOI
(Less) Units Released
(Add) Units Deferred
Absorption Costing NOI
10Units Produced = Units Sold
1) No change in inventory
2) Absorption = Variable
11Units Produced > Units Sold
1) Inventory increases (deferred)
2) Absorption > Variable
12Units Produced < Units Sold
1) Inventory decreases (released)
2) Absorption < Variable
13Additional Unit CM Method
P = selling price/ unit
V = variable expenses/ unit
Unit CM = P - V
14Additional CM Ratio Method
(P - V)/P
15Profit Formula
CM - Fixed Expenses
16Number of Dollar Sales to Achive Target Profit
(Target Profit + Fixed Expenses)/CM Ratio
17Units in Ending Inventory Formula
Units in Beg Inv + Units Produced - Units Sold
18Value of Ending Inventory Under Variable Costing
Units in Ending Inventory x Variable Production Cost