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    Student Formulas

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    Jenish Ankoliya
    This document defines key terms used in break-even analysis such as selling price, variable costs, fixed costs, contribution margin, and profit-volume ratio. It provides the standard formulas for calculating break-even points in units and dollars, as well as cash and profit break-even points which factor in additional costs like depreciation or desired profits. An example calculation is shown to illustrate the application of the formulas.

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    Student Formulas

    Uploaded by

    Jenish Ankoliya
    10 views1 page
    This document defines key terms used in break-even analysis such as selling price, variable costs, fixed costs, contribution margin, and profit-volume ratio. It provides the standard formulas for calculating break-even points in units and dollars, as well as cash and profit break-even points which factor in additional costs like depreciation or desired profits. An example calculation is shown to illustrate the application of the formulas.

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    This document defines key terms used in break-even analysis such as selling price, variable costs, fixed costs, contribution margin, and profit-volume ratio. It provides the standard formulas for calculating break-even points in units and dollars, as well as cash and profit break-even points which factor in additional costs like depreciation or desired profits. An example calculation is shown to illustrate the application of the formulas.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    10 views1 page

    Student Formulas

    Uploaded by

    Jenish Ankoliya
    This document defines key terms used in break-even analysis such as selling price, variable costs, fixed costs, contribution margin, and profit-volume ratio. It provides the standard formulas for calculating break-even points in units and dollars, as well as cash and profit break-even points which factor in additional costs like depreciation or desired profits. An example calculation is shown to illustrate the application of the formulas.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    Download as xlsx, pdf, or txt
    of 1

    Selling Price per unit SP

    Variable Costs per unit VC


    Fixed Costs FC
    Quantity of units sold at break-even N
    Contribution Margin per unit (SP - VC) = CM

    Total Revenue SP x N
    Total Variable Costs VC x N

    Break-even formula in units FC / (SP - VC) = N FC / CM = N


    or

    Profit-volume ratio PV #1 Gross Profit Contribution margin per unit


    or
    Total Reveue Selling Price per unit

    Break-even formula in units FC / CM = units


    Break-even formula dollars FC / PV = break-even in dollars Break-even in units x unit selling price
    or

    Cash break-even in units FC - depreciation / (SP - VC) = N

    Cash break-even in dollars FC - depreciation / PV = sales dollars Break-even in units x unit selling price
    or

    Profit break-even in units (FC + desired profit) / (SP - VC) = N

    Profit break-even in sales dollars (FC + desired profit) / PV = sales dollars Break-even in units x unit selling price
    or

    Example
    Selling Price per unit SP $ 100
    Variable Costs per unit VC $ 75
    Depreciation $ 50,000
    Desired Profit $ 25,000
    Fixed Costs FC $ 250,000
    Contribution Margin per unit (SP - VC) = CM $ 25 ( 100 - 75) = 25

    Profit-volume ratio PV 0.25 ( 25 /100)

    Break-even in units (250,000 / 25) 10,000


    Break-even formula dollars (250,000 / .25) 1,000,000
    ( 10,000 x 100) 1,000,000

    Cash break-even in units (250,000 - 50,000)/25 8,000

    Cash break-even in sales dollars (250,000 - 50,000)/.25 $ 800,000


    (8,000 x 100) $ 800,000

    Profit break-even (250,000 + 25,000)/25 11,000

    Profit break-even in sales dollars (250,000 + 25,000)/.25 $ 1,100,000


    (11,000 x 100) $ 1,100,000

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