CVP single product Flashcards
1
Q
1) SALES VOLUME
A
- Breakeven Sales volume
BES volume = (Total fixed cost)/
(Contribution per unit)
- Sales volume to achieve desired profit
Sales volume = (Total fixed cost + Desired PBT)
/(Contribution per unit)
Note:
• Total fixed cost includes every fixed cost
• Contribution per unit = Sales price per unit – every variable cost per unit
2
Q
2) SALES REVENUE
A
- Breakeven Sales Revenue
= (Total fixed cost)/
(Contribution Margin ratio) - Sales revenue to achieve desired profit
= (Total fixed cost + Desired PBT)/(Contribution Margin ratio)
3
Q
Contribute Margin
A
(Sale price per unit – Variable cost per unit)
/Sales price per unit
(OR)
• CM ratio = (Total Sale revenue – Total Variable costs)/ Total sales revenue
Also Called
C/M ratio (Contribution margin ratio)
C/S ratio (Contribution to sales revenue
P/V ratio (Profit volume ratio)
4
Q
3) MARGIN OF SAFETY
A
- Margin of safety units
MOS (units) = BS units – BES units
OR
MOS (Rs.) = BS Revenue – BES Revenue - Margin of safety ratio or margin of safety (%)
MOS ratio = (BS units – BES units)
/BS units
(OR)
MOS ratio = (BS Revenue – BES Revenue)/BS Revenue
5
Q
4) SALE PRICE PER UNIT TO EARN DESIRED PROFIT
A
Sale price per unit
= (Total fixed cost + Total variable cost + Desired PBT) ÷ Sales volume