SUDIP DUTTA PGPM 09 Section A

CVP ANALYSIS
Summary of Formula:
1. a) Sales Variable cost = Contribution b) Contribution = Fixed cost + Profit c) Sales Variable cost = Fixed cost + Profit 2. a) P/V Ratio (or C/S Ratio) = (Contribution / Sales) X 100 or, Contribution per unit / Selling price per unit or, Change in contribution / Change in sales or, Change in profit / Change in sales or, Profit / Margin of safety ratio b) Contribution = Sales X P/V Ratio c) Sales = Contribution / P/V Ratio 3. Variable Cost = Sales X (1 P/V Ratio) or, Sales X (100 P/V Ratio %) 4. Profit = (Sales X P/V Ratio) Fixed cost Or, P/V Ratio X Margin of safety ratio 5. Break-even Point: a) B/E (in units) = Fixed cost / Contribution per unit b) B/E (in sales value) = Fixed cost X (Sales / Contribution) or, Fixed cost / P/V Ratio or, Break-even units X Selling price p.u. 6. At Break-even point Contribution = Fixed cost 7. a) Margin of safety = Total Sales B/E Sales or, Profit / P/V Ratio or, (Profit X Selling price p.u.) / (Selling price p.u. Variable Cost p.u.) b) Margin of safety ratio = [(Total Sales B/E Sales) / Total Sales] X 100 8. Desired sales = (Fixed cost + Desired Profit) / P/V ratio

GBS/CVP ANALYSIS/KG