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Break-even & CVP Calculator

Enter a selling price, variable cost per unit and fixed costs to find the break-even point in units and revenue. Add budgeted sales and a target profit to see your margin of safety and the volume you need to hit that profit.

Inputs

Used for margin of safety and budgeted profit.

Volume needed to earn this profit after fixed costs.

Break-even point

6,000 units

Exact: 6,000.00 units

Break-even revenue

150,000.00

Fixed costs ÷ C/S ratio

Contribution per unit

10.00

Price − variable cost

C/S (CM) ratio

40.00%

Contribution ÷ sales

Margin of safety

25.0%

2,000 units · 50,000 revenue

Budgeted profit

20,000.00

At 8,000 units

Units for target profit

9,000

Revenue 225,000

Operating leverage

4.00x

Contribution ÷ profit

Profit at different volumes

Cost-volume-profit table
Units soldRevenueVariable costsFixed costsTotal costsProfit / (loss)
00.000.0060,000.0060,000.00(60,000.00)
2,00050,000.0030,000.0060,000.0090,000.00(40,000.00)
4,000100,000.0060,000.0060,000.00120,000.00(20,000.00)
6,000150,000.0090,000.0060,000.00150,000.000.00
8,000200,000.00120,000.0060,000.00180,000.0020,000.00
10,000250,000.00150,000.0060,000.00210,000.0040,000.00
12,000300,000.00180,000.0060,000.00240,000.0060,000.00
14,000350,000.00210,000.0060,000.00270,000.0080,000.00
16,000400,000.00240,000.0060,000.00300,000.00100,000.00
18,000450,000.00270,000.0060,000.00330,000.00120,000.00
20,000500,000.00300,000.0060,000.00360,000.00140,000.00

How it works

Cost-volume-profit (CVP) analysis looks at how profit changes as sales volume changes. It rests on one idea, contribution. Every unit sold earns its selling price less its variable cost. That contribution first pays for the period's fixed costs, and once they are covered, every further unit adds its full contribution to profit. The break-even point is where total contribution exactly equals fixed costs.

Core formulas

Contribution

Contribution per unit = Selling price − Variable cost per unit C/S ratio (CM ratio) = Contribution per unit ÷ Selling price

Break-even

Break-even units = Fixed costs ÷ Contribution per unit Break-even revenue = Fixed costs ÷ C/S ratio

Margin of safety & target profit

Margin of safety (units) = Budgeted units − Break-even units Margin of safety % = MOS units ÷ Budgeted units Units for target profit = (Fixed costs + Target profit) ÷ Contribution per unit

Worked example

A product sells for 25 and costs 15 per unit in variable costs. Monthly fixed costs are 60,000, budgeted sales are 8,000 units, and management wants a profit of 30,000.

  • Contribution per unit = 25 − 15 = 10, and the C/S ratio = 10 ÷ 25 = 40%.
  • Break-even = 60,000 ÷ 10 = 6,000 units, or 60,000 ÷ 0.40 = 150,000 revenue.
  • Margin of safety = 8,000 − 6,000 = 2,000 units, which is 25% of budget (50,000 of revenue).
  • Budgeted profit = 8,000 × 10 − 60,000 = 20,000, so operating leverage = 80,000 ÷ 20,000 = 4 (and 1 ÷ 25% = 4).
  • Target profit volume = (60,000 + 30,000) ÷ 10 = 9,000 units, or 225,000 of revenue.

The profit table under the calculator shows the same story: a loss below 6,000 units and 10 of extra profit for every unit above it.

Multi-product break-even

With several products sold in a fixed mix, use a weighted average C/S ratio: total contribution ÷ total revenue for the standard mix. Break-even revenue is then fixed costs ÷ weighted C/S ratio. If the mix changes, so does the break-even point. Shifting sales towards higher-margin products lowers it. This is a favourite ACCA PM and CIMA exam twist.

Frequently asked questions

What is the break-even point?

It is the level of sales at which total revenue equals total costs, so profit is exactly zero. Below it the business makes a loss, above it a profit. In units it is fixed costs ÷ contribution per unit, and in revenue it is fixed costs ÷ C/S ratio.

What is the difference between the contribution margin ratio and the C/S ratio?

Nothing. They are the same ratio under different names. ACCA and CIMA call it the contribution to sales (C/S) or profit/volume (P/V) ratio. US texts and the US CMA call it the contribution margin ratio. It is contribution ÷ sales, the share of each sale left over to cover fixed costs and then provide profit.

How do I calculate the margin of safety?

Margin of safety = budgeted sales − break-even sales. It can be given in units, revenue, or as a percentage of budgeted sales. It tells you how far sales can fall before the business starts making a loss. A higher margin of safety means lower risk.

How many units do I need to sell to reach a target profit?

Required units = (fixed costs + target profit) ÷ contribution per unit. For required revenue, divide by the C/S ratio instead. If the target is an after-tax profit, first gross it up: pre-tax target = after-tax target ÷ (1 − tax rate).

What is the degree of operating leverage?

Operating leverage = contribution ÷ profit, which is also 1 ÷ margin of safety %. It measures how sensitive profit is to a change in sales. With leverage of 4, a 10% rise in sales volume increases profit by 40%, and a 10% fall reduces it by 40%.

What assumptions does CVP analysis make?

Selling price and variable cost per unit are constant, fixed costs do not change within the relevant range, a single product (or a constant sales mix) is sold, and production equals sales so inventory does not change. Real cost behaviour is rarely this tidy, so treat the results as a planning approximation.