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    Cheat sheet for income statement

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    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
    Add ...

    Solution Summary

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