The total cost by sales coverage ratio is a financial metric that compares the total costs incurred by a business to the sales generated within a specific period. It helps assess the efficiency of sales operations by indicating how much cost is associated with each dollar of sales. A lower ratio suggests better cost management and operational efficiency, while a higher ratio may indicate potential issues in controlling expenses relative to sales revenue. Companies often use this ratio to evaluate performance and make informed decisions about resource allocation.
Break even point = Fixed cost / Contribution margin ratio Contribution margin ratio = (sales - variable cost ) / Sales
A contribution margin of 30% translates to Sales of $900,000 (sales-variable cost)/sales=contribution margin ratio. Since this sales level is also the break even point, there is no operating profit. Thus, a 40% tax rate is immaterial and total fixed cost equals sales minus variable cost or $270,000.
Breakeven point = Fixed cost / contribution margin ratio contribution margin ratio = sales - variable cost / sales.
total cost of sales may include indirect cost as well while direct cost of sales only included direct costs.
Gross margin ratio = (sales - cost fo sales) / sales Gross margin ratio =( 28496 million - 19092 million ) / 28496 million
It is the ratio generated by dividing the Variable cost over total Sales/Revenue
Total Sales Revenue = 88140 Total Cost = 11300 * (4.29+2.73) = 79326 Total Variable Cost = 79326 * 4.29 / (4.29+2.73) = 48477 Contribution Margin Ratio = 48477 / 88140 = .55 or 55 %
sales-variable cost= contribution
Break even point = Fixed cost / Contribution margin ratio Contribution margin ratio = (sales - variable cost ) / Sales
The Profit Volume (PV) Ratio is the ratio of Contribution over Sales. It measures the Profitability of the firm and is one of the important ratios for computing profitabilty. The Contribution is the extra amount of sales over variable cost. Contribution is also Fixed cost plus profit. Profit = Sales - Variable Cost - Fixed Cost. Thus Contribution is: Profit + Fixed Cost = Sales - Variable Cost. Therefore PV Ratio = (Contribution/Sales)X100. (This as a percentage of sales)
If Variable cost and sales ratio is provided then by using mathematical equation approach mixing figures can be found by using provided figures. Sales = Variable cost + Sales percentage of (Variable cost)
The Profit Volume (PV) Ratio is the ratio of Contribution over Sales. It measures the Profitability of the firm and is one of the important ratios for computing profitabilty. The Contribution is the extra amount of sales over variable cost. Contribution is also Fixed cost plus profit. Profit = Sales - Variable Cost - Fixed Cost. Thus Contribution is: Profit + Fixed Cost = Sales - Variable Cost. Therefore PV Ratio = (Contribution/Sales)X100. (This as a percentage of sales)
Contribution margin ratio determines the percentage of variable cost in over all sales while contribution margin per unit tells the variable cost portion in per unit total cost or sales price.
Breakeven point = Fixed Cost / Contribution margin ratio Contribution margin ratio = (Sales - Variable Cost) / Sales
Breakeven point = Fixed cost / contribution margin ratio contribution margin ratio = sales - variable cost / sales.
A contribution margin of 30% translates to Sales of $900,000 (sales-variable cost)/sales=contribution margin ratio. Since this sales level is also the break even point, there is no operating profit. Thus, a 40% tax rate is immaterial and total fixed cost equals sales minus variable cost or $270,000.
Breakeven point = Fixed cost / contribution margin ratio contribution margin ratio = sales - variable cost / sales.