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    CVP Analysis by Mariam Aly

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    Mariam Aly
    This document discusses key concepts in cost-volume-profit (CVP) analysis including contribution, contribution-to-sales ratio, breakeven point, target profit, and margin of safety. CVP analysis examines the relationship between costs, volume, and profit at different activity levels. It defines contribution as sales minus variable costs and the contribution-to-sales ratio as a measure of contribution earned per dollar of sales. Breakeven point refers to the sales or units needed to cover fixed costs. Target profit calculations determine the additional sales or units required above breakeven to reach a desired profit level. Margin of safety is the difference between expected and breakeven sales volumes. Examples are provided to illustrate each concept.

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    CVP Analysis by Mariam Aly

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    Mariam Aly
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    This document discusses key concepts in cost-volume-profit (CVP) analysis including contribution, contribution-to-sales ratio, breakeven point, target profit, and margin of safety. CVP analysis examines the relationship between costs, volume, and profit at different activity levels. It defines contribution as sales minus variable costs and the contribution-to-sales ratio as a measure of contribution earned per dollar of sales. Breakeven point refers to the sales or units needed to cover fixed costs. Target profit calculations determine the additional sales or units required above breakeven to reach a desired profit level. Margin of safety is the difference between expected and breakeven sales volumes. Examples are provided to illustrate each concept.

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    The topic is cost , volume and profit Related to Management Accounting

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    Cvp Analysis by Mariam Aly

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    This document discusses key concepts in cost-volume-profit (CVP) analysis including contribution, contribution-to-sales ratio, breakeven point, target profit, and margin of safety. CVP analysis examines the relationship between costs, volume, and profit at different activity levels. It defines contribution as sales minus variable costs and the contribution-to-sales ratio as a measure of contribution earned per dollar of sales. Breakeven point refers to the sales or units needed to cover fixed costs. Target profit calculations determine the additional sales or units required above breakeven to reach a desired profit level. Margin of safety is the difference between expected and breakeven sales volumes. Examples are provided to illustrate each concept.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    Download as pptx, pdf, or txt
    6 views19 pages

    CVP Analysis by Mariam Aly

    Uploaded by

    Mariam Aly
    This document discusses key concepts in cost-volume-profit (CVP) analysis including contribution, contribution-to-sales ratio, breakeven point, target profit, and margin of safety. CVP analysis examines the relationship between costs, volume, and profit at different activity levels. It defines contribution as sales minus variable costs and the contribution-to-sales ratio as a measure of contribution earned per dollar of sales. Breakeven point refers to the sales or units needed to cover fixed costs. Target profit calculations determine the additional sales or units required above breakeven to reach a desired profit level. Margin of safety is the difference between expected and breakeven sales volumes. Examples are provided to illustrate each concept.

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    Download as pptx, pdf, or txt
    of 19

    CVP

    ANALYSIS
    By Mariam Aly ❤️
    Introduction OF
    CVP Analysis

    "Cost-volume-profit (CVP) analysis is


    the study of the interrelationships
    between costs, volume and profit at
    various levels of activity
    Contribution
    Selling price. X
    Less: Variable cost. (X)
    C/S RATIO
    (contribution/Sales)
    The C/S ratio is a measure of how much
    contribution is earned from each $1 of
    sales.
    Contribution per unit/Selling price *100

    Example:
    BREAKEVEN POINT

    (a) The breakeven point which is the activity level at


    which there is neither profit nor loss.

    (b) The amount by which actual sales can fall below


    anticipated sales, without a loss being incurred
    Breakeven point

    Breakeven point in Revenue=Fixed cost /C/S Ratio

    Breakeven point in Units= Fixed cost /


    Contribution per unit
    Breakeven point in Units

    Breakeven point in Units= Fixed cost /


    Contribution per unit

    Example
    Breakeven point in Revenue

    Breakeven point in Revenue=Fixed cost /C/S Ratio

    Example
    Target profit

    Target profit in Units=Tp + FC /Contribution

    Target profit in Revenue= Tp +FC/C/S Ratio


    Target profit in Units

    Target profit in Units=Tp + FC /Contribution


    Target profit in Revenue

    Target profit in Revenue= Tp +FC/C/S Ratio

    Example:
    Solution:
    Margin of Safety
    The margin of safety is the difference in
    units between the expected sales
    volume and the breakeven sales volume
    and it is sometimes expressed as a
    percentage of the expected sales
    volume.
    Example

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