CVP breakeven point (copy)

what is breakeven level of activities?

what is breakeven level of activities?

output level where profit and loss isn’t made.

what is the formula for breakeven point in units

total fixed costs / contribution per unit

how to calculate contribution per unit?

selling price - variable cost

how to calculate contribution?

selling price x contribution to sales ratio

contribution to sales (c/s)

contribution + sales value

selling price

variable cost / (100% - c/s ratio)

formula for level of activities to meet a target profit

units required to meet target profit = (target fixed costs + target profit)/ contribution per unit

calculation for profit at the breakeven lvl of activities

calculation of breakeven in monetary terms (c/s ratio)

break even sales revenue = total fixed costs/ c/s ratio

1. contribution to sales ratio per unit

contribution per unit / selling price per unit

2. contribution to sales ratio per unit

total contribution / total sales revenue

total contribution

total sales revenue - total variable costs

Define margin of safety

difference between the budgeted levels of activities and the breakeven point, indicates the expected profit levels.

Margin of safety formula

Budgeted sales (amount or units) – breakeven sales (amount or units)

Margin of safety % formula

Budgeted sales (amount or unit) – breakeven sales (amount or unit) / Budgeted sales (amount or unit)

profit

margin of safety x contribution per unit