![iteman classification for depreciation iteman classification for depreciation](https://cdn.corporatefinanceinstitute.com/assets/SYD-table.png)
Another formula is: Fixed costs + Target net income Contribution margin ratio = Required sales.9.Describe the essential features of a cost-volume-profit income statement. One formula is: Required sales = Variable costs + Fixed costs + Target net income. The formulas for margin of safety are Actual (expected) sales Break-even sales = Margin of safety in dollars Margin of safety in dollars Actual (expected) sales = Margin of safety ratio.8.Give the formulas for determining sales required to earn target net income.
![iteman classification for depreciation iteman classification for depreciation](https://0.academia-photos.com/attachment_thumbnails/55391757/mini_magick20190114-29879-19dsixi.png)
Margin of safety is the difference between actual or expected sales and sales at the break-even point. The break-even point can be (a) computed from a mathematical equation, (b) computed by using a contribution margin technique, and (c) derived from a CVP graph.7.Define margin of safety and give the formulas for computing it. It can be expressed as a per unit amount or as a ratio.6.Identify the three ways to determine the break-even point. Contribution margin is the amount of revenue remaining after deducting variable costs. The five components of CVP analysis are (a) volume or level of activity, (b) unit selling prices, (c) variable cost per unit, (d) total fixed costs, and (e) sales mix.5.Indicate what contribution margin is and how it can be expressed. One method that management may use is the high-low method.4.List the five components of cost-volume-profit analysis. For purposes of CVP analysis, mixed costs must be classified into their fixed and variable elements. Mixed costs increase in total but not proportionately with changes in the activity level.
![iteman classification for depreciation iteman classification for depreciation](https://d3i71xaburhd42.cloudfront.net/d918a020137f5776263c4d052ac1cc0e432247b9/17-Figure1-1.png)
It is important in CVP analysis because the behavior of costs is linear throughout the relevant range.3.Explain the concept of mixed costs. The relevant range is the range of activity in which a company expects to operate during a year. Fixed costs are costs that remain the same in total regardless of changes in the activity index.2.Explain the significance of the relevant range. Variable costs are costs that vary in total directly and proportionately with changes in the activity index. #5-2Test Bank f_o_r_ Managerial Accounting, Second Edition_5-37Cost-VolumeA-Profit RelationshipsCOST-VOLUME-PROFIT RELATIONSHIPS1.Distinguish between variable and fixed costs.