🎯Cost-Volume-Profit (CVP) Analysis
Contribution Margin per Unit
Sales Price per Unit - Variable Cost per Unit = Contribution Margin per Unit
What It Means
How much each unit contributes to covering fixed costs and profit.
Example
Sales Price:$100
Variable Cost:$60
$100 - $60
Contribution Margin = $40 per unit
Related Formulas
Contribution Margin Ratio
Contribution Margin ÷ Sales × 100 = CM Ratio %
Break-Even Point in Units
Fixed Costs ÷ Contribution Margin per Unit = Break-Even Units
Break-Even Point in Sales Dollars
Fixed Costs ÷ Contribution Margin Ratio = Break-Even Sales $
Target Profit (Units)
(Fixed Costs + Target Profit) ÷ Contribution Margin per Unit = Units Needed
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