BU247 Lecture Notes - Lecture 3: Contribution Margin, Retained Earnings, Earnings Before Interest And Taxes
Document Summary
Segment dividing the market into different income brackets. A fixed cost that is incurred because of the existence of a particular business segment and that would be eliminated if the segment were eliminated. A fixed cost that supports more than one business segment, but is not traceable in whole or in part to any one of the business segments. Cvp analysis studies the behavior and relationship among these elements as changes occur in units sold, selling price, vc per unit and the fc per unit. Breakeven point formula units: total fixed costs / cm per unit. Fixed costs / (selling price per unit - variable cost per unit) Cm per unit / sales price per unit. Unit contribution margin sales price - variable costs. Total contribution margin difference between revenues and total variable costs. Target net income required sales - variable costs- fixed costs= target net income. Operating leverage formula contribution margin / operating profit.
