Cost Volume Profit Formulas

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10 Terms

1
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Contribution Margin

Sales Revenue – Variable Expenses

2
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CM per Unit

Selling Price per Unit – Variable Expenses per Unit

3
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Contribution Margin Ratio

CM / Sales Revenue

4
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Breakeven point in Units

Fixed Expenses / CM per Unit

<p>Fixed Expenses / CM per Unit </p>
5
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Breakeven point in Dollars

Fixed Expenses / CM Ratio

B/E Units x Selling Price per Unit

6
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Target Sales in Units

(Fixed Expenses + Target Operating Income) / CM per Unit

7
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Target Sales in Dollars

(Fixed Expenses + Target Operating Income) / CM Ratio

8
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Operating Leverage

CM / Operating Income

9
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Margin of Safety

Budgeted Sales – Breakeven Sales

10
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Margin of Safety %

Margin of Safety / Budgeted Sales