Cost Volume Profit Formulas

Question 1

Contribution margin (profit volume ratio)?

Answer 1

contribution/sales x 100

Question 2

Break-even point in units?

Answer 2

fixed costs/contribution per unit

Question 3

Break-even point in sales?

Answer 3

fixed costs/contribution per unit x unit contribution

Question 4

Volume to earn a target profit?

Answer 4

(fixed costs + target profit)/unit contribution

Question 5

Margin of safety?

Answer 5

(expected sales - break-even sales)/expected sales x 100

Question 6

Per unit contribution?

Answer 6

selling price - variable cost per unit

Question 7

Forecasting for future expenditure? (Total cost)

Answer 7

fixed costs + (variable costs x units of activities)