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Break-even Point in Sales Dollars = \frac{Fixed Costs}{Contribution Margin Ratio}

Operating Leverage = \frac{Contribution Margin}{Net Operating Income}

Operating leverage is the degree to which a firm can increase operating income by increasing revenue. High operating leverage means a high proportion of fixed costs, leading to more sensitivity of the break-even point to sales changes.

Break-even Point in Units = \frac{Fixed Costs}{Price per Unit - Variable Cost per Unit}

Margin of Safety = \frac{Actual Sales - Break-even Sales}{Actual Sales}

Variable Cost Ratio = \frac{Variable Costs}{Sales}

Contribution Margin = Sales - Variable Costs

Increasing prices can lead to an earlier break-even point if volume remains stable, as each sale contributes more to covering fixed costs.

Sales Mix = Total number of units of Product A sold / Total sales units of all products

Target Profit Analysis in Sales Dollars = \frac{Fixed Costs + Target Profit}{Contribution Margin Ratio}

In hospitality finance, the break-even point helps manage costs, set pricing, and make investment decisions, crucial for restaurant and hotel operations and financial stability.

Target Profit Analysis in Units = \frac{Fixed Costs + Target Profit}{Price per Unit - Variable Cost per Unit}

Margin of Safety is the difference between actual sales and the break-even sales. It indicates how much sales can drop before the business incurs a loss.

Contribution Margin Ratio = \frac{Contribution Margin}{Sales}