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Cheat sheet for income statement

Basic Cheat Sheet for Understanding an Income Statement. Included formulas for Break Even Point, Revenue, Safety Margin, Leverage and sample income statement.


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Formulas and Concepts
Break Even Point: Sales=Variable Expenses+Fixed expenses+Profit, Break Even Point in Units=Fixed expenses/unit CM, Break Even in Revenue = fixed expense/CM ratio, unit CM= CM/units
Safety Margin=Sales-Break Even Point, CM Ratio= CM/Total Sales, Incremental CM= Increased sales*CM Ratio, Operating Leverage=CM/net operating income, Multiply operating leverage by projected sales increase to determine how much income will increase.


Purchase of raw materials
Raw materials inventory, Jan 1
Raw materials inventory, Dec 31
Depreciation, factory
Direct labor cost
Maintenance, factory
Administrative salaries (non factory)
Utilities, factory
Selling expenses
Indirect labor
Depreciation, selling
Other factory overhead
WIP, Jan 1
WIP, Dec 31
Finished goods inventory, Jan 1
Finished goods inventory, Dec 31

1) Schedule of costs of goods manufactured for specified year.

Direct Materials:
Raw materials, Jan 1
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Solution Summary

Cheat sheet for income statement, includes formulas for key line items for quick reference.