CVP and Contribution Flashcards
(6 cards)
1
Q
Contribution per unit
A
Selling price – Variable cost
2
Q
Break‑even point (units)
A
Fixed cost ÷ Contribution per unit
3
Q
Break‑even point (£)
A
Fixed cost ÷ Contribution‑to‑sales ratio
4
Q
Margin of Safety
A
Budgeted sales – Break‑even sales (units or £); MoS % = (MoS units / Budget units) × 100
5
Q
Operating leverage
A
Contribution ÷ Operating profit — gauges sensitivity of profit to sales swings
6
Q
High‑low method
A
VC pu = ( ΔY / ΔX ); use Y = a + bX to back‑solve fixed cost