Variable Costs
Change in cost / Change in Activity
Contribution Margin
Sales Revenue - Variable Costs
CM/Unit
Selling Price - Variable Cost/Unit
Selling Price * Contribution Margin Ratio
CM Ratio
(CM/Sales) * 100%
(Sales Revenue- Variable Costs) / Sales Revenue
BEP (units)
Fixed costs / CM/unit
BEP ($)
Fixed costs / CM ratio
BEP (units) * $/unit
Target Sales (Units)
(Fixed costs + Taregt Profit) / (CM/unit)
Pre Tax Profit
After tax profit / (1-tax rate)
Cost of Goods Sold
Beginning Inventory + Purchases- Ending Inventory
Return On Investment
Controllable Margin / Average Operating Assets
Improved ROI
(Operating Income / Sales) * (Sales / Operating Assets)
Profit Margin * Investment Turnover
Total Budgeted Costs
Fixed costs + Variable Costs
Residual Income
Controllable Margin - (Minimum Rate of Return * Average Operating Assets)
Economic Value Added
Investment Centers Operating Tax - Weighted average cost of Capital * Total Capital Used
Investment turnover
Sales / Average operating asset
Profit margin
Controllable Margin / Sales
Controllable Margin
CM - FIxed Costs
