Contribution margin ratio is calculated as the
unit contribution margin divided by sales price per unit
Total contribution margin in dollars divided by pretax income is the
degree of operating leverage
The sales level at which a company neither earns a profit nor incurs a loss is the
break even point.
Total Cost
Fixed Costs + Variable Costs
CM (contribution margin)
Sales price per unit - total variable cost per unit
BEP Units
Fixed costs/Contribution margin per unit
Degree of Operating Leverage
Total CM (in Dollars)/Pretax Income
Pre-Tax Income
(Sales-variable costs) - variable costs