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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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Solution Summary

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

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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.

Given

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)
Sales
Utilities, factory
Supplies,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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