COST VOLUME PROFIT ANALYSIS SUMMARY OF FORMULAS

Sales = Cost + Profit

Sales ( S ) = Variable Cost ( V ) + Fixed Cost ( F ) + Profit ( P )
TRADITIONAL FORMULA
Sales – Variable Cost = Fixed Cost + Profit

1. Profit Volume Ratio ( % )

𝑃 𝑆−𝑉
𝑅𝑎𝑡𝑖𝑜 =
𝑉 𝑆

Or
𝑃 𝐹+𝑃
𝑅𝑎𝑡𝑖𝑜 =
𝑉 𝑆

Or
𝑃 𝐶
𝑅𝑎𝑡𝑖𝑜 =
𝑉 𝑆
Or
𝑃 𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑃𝑟𝑜𝑓𝑖𝑡
𝑅𝑎𝑡𝑖𝑜 =
𝑉 𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑆𝑎𝑙𝑒𝑠

2. Break Even Point ( B.E.P )

a) B.E.P ( Sale $ )
𝐹
𝐵. 𝐸. 𝑃 ( 𝑆𝑎𝑙𝑒𝑠 $) = 𝑃
𝑅𝑎𝑡𝑖𝑜
𝑉

b) B.E.P ( Sale Units )

𝐹
𝐵. 𝐸. 𝑃 ( 𝑆𝑎𝑙𝑒𝑠 𝑈𝑛𝑖𝑡𝑠) =
𝐶𝑃𝑈
 3. Margin of Safety

a) Margin of Safety ( MOS) ( Sales $ )

𝑃𝑟𝑜𝑓𝑖𝑡
𝑀𝑂𝑆 ( 𝑆𝑎𝑙𝑒𝑠 $) = 𝑃
𝑅𝑎𝑡𝑖𝑜
𝑉

Or
𝑀𝑂𝑆 ( 𝑆𝑎𝑙𝑒𝑠 $) = 𝑇𝑜𝑡𝑎𝑙 𝑆𝑎𝑙𝑒𝑠 $ − 𝐵. 𝐸. 𝑃 𝑆𝑎𝑙𝑒𝑠 $
b) Margin of Safety ( Sales Units )
𝑃𝑟𝑜𝑓𝑖𝑡
𝑀𝑂𝑆 ( 𝑆𝑎𝑙𝑒𝑠 𝑈𝑛𝑖𝑡𝑠) =
𝐶𝑃𝑈
MODERN FORMULA
Sales × P/V ratio = F + P

SALES TO EARN DESIRED PROFIT

a
𝐹+𝑃
( 𝑆𝑎𝑙𝑒𝑠 $) = 𝑃
𝑅𝑎𝑡𝑖𝑜
𝑉

b
𝐹+ 𝑃
( 𝑆𝑎𝑙𝑒𝑠 𝑈𝑛𝑖𝑡𝑠) =
𝐶𝑃𝑈