{"id":888,"date":"2015-12-27T15:24:36","date_gmt":"2015-12-27T15:24:36","guid":{"rendered":"https:\/\/courses.candelalearning.com\/managacct2x1xmaster\/?post_type=chapter&p=888"},"modified":"2015-12-27T15:24:36","modified_gmt":"2015-12-27T15:24:36","slug":"chapter-5-key-points","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/suny-managacct\/chapter\/chapter-5-key-points\/","title":{"raw":"Chapter 5 Key Points","rendered":"Chapter 5 Key Points"},"content":{"raw":"

CVP Key Takeaways<\/h2>\r\nFixed Cost stays the same in total but varies per unit<\/em>.\r\n\r\nVariable Costs stay the same per unit but vary in total<\/em>.\r\n\r\nTo calculate cost per unit (this works for any type of cost per unit):\r\n\r\n\u00a0\u00a0 Cost\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/span> (make sure to use the correct cost)\r\n\r\nUnits produced\r\n\r\n \r\n\r\nContribution Margin is Sales \u2013 Variable Cost (contribution margin per unit is Sales price per unit \u2013 Variable cost per unit).\r\n\r\nContribution Margin RATIO is: Contribution Margin per unit \/ Sales Price per unit\r\n\r\n \r\n\r\nYou can find the breakeven point IN UNITS or the units necessary at any income level using the same formula:\r\n\r\n\u00a0\u00a0 Fixed Costs + Target Income<\/span>\r\n\r\nContribution Margin per unit\r\n\r\nNote: At breakeven, your target income is ZERO<\/em>.\r\n\r\n \r\n\r\n \r\n\r\nYou can calculate breakeven point in SALES DOLLARS or Sales necessary to achieve a specific amount of income in 2 ways:\r\n\r\n1.\u00a0 Fixed Costs + Target Income<\/span>\r\n\r\nContribution Margin RATIO\r\n\r\nNote: At breakeven, your target income is ZERO<\/em>.\r\n\r\n \r\n
    \r\n\t
  1. OR, an alternative method is to take your breakeven point in UNITS x sales price per unit.<\/li>\r\n<\/ol>\r\n \r\n\r\nContribution Margin Income Statement assumes all costs can be classified as either Fixed or Variable Costs. The basic structure is:\r\n\r\nSales\r\n\r\n- Variable Costs\r\n\r\n= Contribution Margin (Sales \u2013 Variable Costs)<\/em>\r\n\r\n- Fixed Costs\r\n\r\n=Net Income (Contribution Margin \u2013 Fixed Costs)\r\n\r\n \r\n\r\nClick CVP Key Takeaways<\/a> for a printable copy.","rendered":"

    CVP Key Takeaways<\/h2>\n

    Fixed Cost stays the same in total but varies per unit<\/em>.<\/p>\n

    Variable Costs stay the same per unit but vary in total<\/em>.<\/p>\n

    To calculate cost per unit (this works for any type of cost per unit):<\/p>\n

    \u00a0\u00a0 Cost\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/span> (make sure to use the correct cost)<\/p>\n

    Units produced<\/p>\n

     <\/p>\n

    Contribution Margin is Sales \u2013 Variable Cost (contribution margin per unit is Sales price per unit \u2013 Variable cost per unit).<\/p>\n

    Contribution Margin RATIO is: Contribution Margin per unit \/ Sales Price per unit<\/p>\n

     <\/p>\n

    You can find the breakeven point IN UNITS or the units necessary at any income level using the same formula:<\/p>\n

    \u00a0\u00a0 Fixed Costs + Target Income<\/span><\/p>\n

    Contribution Margin per unit<\/p>\n

    Note: At breakeven, your target income is ZERO<\/em>.<\/p>\n

     <\/p>\n

     <\/p>\n

    You can calculate breakeven point in SALES DOLLARS or Sales necessary to achieve a specific amount of income in 2 ways:<\/p>\n

    1.\u00a0 Fixed Costs + Target Income<\/span><\/p>\n

    Contribution Margin RATIO<\/p>\n

    Note: At breakeven, your target income is ZERO<\/em>.<\/p>\n

     <\/p>\n

      \n
    1. OR, an alternative method is to take your breakeven point in UNITS x sales price per unit.<\/li>\n<\/ol>\n

       <\/p>\n

      Contribution Margin Income Statement assumes all costs can be classified as either Fixed or Variable Costs. The basic structure is:<\/p>\n

      Sales<\/p>\n

      – Variable Costs<\/p>\n

      = Contribution Margin (Sales \u2013 Variable Costs)<\/em><\/p>\n

      – Fixed Costs<\/p>\n

      =Net Income (Contribution Margin \u2013 Fixed Costs)<\/p>\n

       <\/p>\n

      Click CVP Key Takeaways<\/a> for a printable copy.<\/p>\n","protected":false},"author":1195,"menu_order":11,"template":"","meta":{"_candela_citation":"[]","CANDELA_OUTCOMES_GUID":"","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-888","chapter","type-chapter","status-publish","hentry"],"part":18,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/suny-managacct\/wp-json\/pressbooks\/v2\/chapters\/888","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/suny-managacct\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/suny-managacct\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-managacct\/wp-json\/wp\/v2\/users\/1195"}],"version-history":[{"count":1,"href":"https:\/\/courses.lumenlearning.com\/suny-managacct\/wp-json\/pressbooks\/v2\/chapters\/888\/revisions"}],"predecessor-version":[{"id":890,"href":"https:\/\/courses.lumenlearning.com\/suny-managacct\/wp-json\/pressbooks\/v2\/chapters\/888\/revisions\/890"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/suny-managacct\/wp-json\/pressbooks\/v2\/parts\/18"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/suny-managacct\/wp-json\/pressbooks\/v2\/chapters\/888\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/suny-managacct\/wp-json\/wp\/v2\/media?parent=888"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-managacct\/wp-json\/pressbooks\/v2\/chapter-type?post=888"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-managacct\/wp-json\/wp\/v2\/contributor?post=888"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-managacct\/wp-json\/wp\/v2\/license?post=888"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}