Planning, Control and Analysis

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  1. Formula for Operating income
    Sales - Variable costs - Fixed cotst = Operating income
  2. Formula for Contribution Margin
    Sales - Variable Costs
  3. Breakeven Point
    Contribution Marging - Fixed Costs = 0
  4. Breakeven (units)
    • Breakeven (units) = (Fixed costs) / Contribution margin
    • A.K.A. = (Fixed costs) / (Sales - Variable costs)
  5. Breakeven (sales)
    Breakeven (sales) = Fixed costs / CM ratio

    CM ratio = (Sales - Variable costs) / (Sales)
  6. Margin of Safety
    The amount of sales you can drop before you hit your breakeven point
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Planning, Control and Analysis
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Planning, Control and Analysis
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