CVP and Contribution

Question 1

Contribution per unit

Answer 1

Selling price – Variable cost

Question 2

Break‑even point (units)

Answer 2

Fixed cost ÷ Contribution per unit

Question 3

Break‑even point (£)

Answer 3

Fixed cost ÷ Contribution‑to‑sales ratio

Question 4

Margin of Safety

Answer 4

Budgeted sales – Break‑even sales (units or £); MoS % = (MoS units / Budget units) × 100

Question 5

Operating leverage

Answer 5

Contribution ÷ Operating profit — gauges sensitivity of profit to sales swings

Question 6

High‑low method

Answer 6

VC pu = ( ΔY / ΔX ); use Y = a + bX to back‑solve fixed cost