Return on Investment (ROI) Definition: Net operating income divided by average operating assets. It also equals margin multiplied by turnover.
net operating income
net operating income In accounting and finance, earnings before interest and taxes, is a measure of a firm’s profit that excludes interest and income tax expenses. It is the difference between operating revenues and operating expenses.
Variable Costing System A Decision Making Tool for Management: After studying this chapter you should be able to: Explain how variable costing differs from absorption costing and compute unit product costs under each method Prepare income statements using variable and absorption costing. Reconcile variable
Return on Investment (ROI) Method for Measuring Managerial Performance: In a truly decentralized company, segment managers are given a great deal of autonomy. Profit and investment centers are virtually independent businesses, with their managers having about the same control over decisions as if they
Definition and Explanation of Operating Leverage: A lever is a tool for multiplying force. Using a lever, a massive object can be moved with only a modest amount of force. In Business, operating leverage serves a similar purpose. Operating leverage is a measure of
Cost Volume Profit (CVP) Formulas: Contribution margin = Sales – Variable expenses (manufacturing and non-manufacturing) Net operating income = Contribution margin – Fixed expenses (manufacturing and non manufacturing) Contribution margin ratio = Contribution margin / Sales Break even point (units) = Fixed expenses /
Contribution Margin and Basics of Cost Volume Profit (CVP) Analysis: Learning Objectives: Define and explain contribution margin. Prepare a contribution margin format income statement. What are the advantages of calculating contribution margin? Definition and Explanation of Contribution Margin: Contribution margin is the amount remaining
Learning Objectives: Define and explain contribution margin ratio. Calculate CM ratio. What is the importance and benefit of calculating CM ratio? Contribution margin percentage or average Definition of Contribution Margin Ratio Formula Calculation Importance Review Problems Contribution Margin Ratio Calculator Definition of Contribution Margin Ratio: The contribution margin as a percentage of total