When studying managerial accounting, understanding break even point and formula are quite critical for operating managers as breakeven point are critical for the survival of a business . Below is a quick reference table summarizing all the major breakeven analysis formulas
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BREAKEVEN ANALYSIS FORMULAS |
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Contribution |
sales minus marginal(variable) cost |
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Contribution |
fixed cost plus profit |
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Profit |
contribution minus fixed cost |
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Contribution sales ratio |
contribution sales |
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Breakeven point (quantity) |
Fixed cost Contribution per unit |
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Breakeven point-(value) |
Sales value x fixed cost Total contribution |
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Breakeven point- ( value) |
Fixed cost Contribution sales ratio |
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Margin of safety |
Sales level minus breakeven point ( quantity) |
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Margin of safety |
Profit Contribution sales ratio |