CVP and Contribution Flashcards
(6 cards)
Contribution per unit
Selling price – Variable cost
Break‑even point (units)
Fixed cost ÷ Contribution per unit
Break‑even point (£)
Fixed cost ÷ Contribution‑to‑sales ratio
Margin of Safety
Budgeted sales – Break‑even sales (units or £); MoS % = (MoS units / Budget units) × 100
Operating leverage
Contribution ÷ Operating profit — gauges sensitivity of profit to sales swings
High‑low method
VC pu = ( ΔY / ΔX ); use Y = a + bX to back‑solve fixed cost