# 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

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### Other Related Accounting Articles:

- Effect of Change in Variable Cost, Fixed Cost and Sales Volume on Contribution Margin and Profitability
- Effect of Change in Variable Cost and Sales Volume on Contribution Margin and Profitability
- Cost Volume Profit (CVP) Consideration in Choosing a Cost Structure
- Margin of Safety (MOS)
- Cost Volume Profit (CVP) Relationship in Graphic Form
- Effect of Change in Fixed Cost and Sales Volume on Contribution Margin and Profitability
- Importance of Contribution Margin – Advantages of Cost Volume Profit (CVP) Analysis
- Limitations of Cost-Volume-Profit (CVP) Analysis
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