Cost Volume Profit (CVP) Formulas


Cost Volume Profit (CVP) Formulas:

Contribution margin = Sales – Variable expenses (manufacturing and non-manufacturing)

Net operating income = Contribution margin – Fixed expenses (manufacturing and non manufacturing)

Contribution margin ratio = Contribution margin / Sales

Break even point (units) = Fixed expenses / Unit contribution margin

Break even point (dollar sales) =  Fixed expenses / CM ratio

Units sales to attain target profit = (Fixed expenses + Target profit) / Unit contribution margin

Dollar sales to attain target profit = (Fixed expenses + Target profit) / Contribution margin ratio

Margin of safety = Total budgeted or actual sales – Break even sales

Margin of safety percentage or margin of safety ratio = Margin of safety / Total budgeted or actual sales

Degree of operating leverage = Contribution margin / Net operating income

You may also be interested in other cost/managerial accounting formulas:

  1. Cost of Goods Manufactured, Sold, and Income Statement Formulas
  2. Cost Volume Profit (CVP) Formulas

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