SALES

(VARIABLE COST)
CONTRIBUTION MARGIN
(FIXED COST)
PROFIT BEFORE TAX

BREAK EVEN
 TOTAL COST = TOTAL SALES
 ALL COSTS ARE COVERED NOT JUST VARIABLE COST
 PROFIT = ZERO

SALES
(VARIABLE COST)
(FIXED COST)
PROFIT BEFORE TAX

SALES = SELLING PRICE PER UNIT * NUMBER OF UNITS

VARIABLE COST = VAR COST PER UNIT

*SA BAWAT ISANG UNIT NA DAGDAG ABOVE YOUR BREAKEVEN POINT, MADADAGDAGAN RIN
YUNG PROFIT MO BY THE CONTRIBUTION MARGIN PER UNIT KASI NACOVER NA NUNG
CONTRIBUTION MARGIN YUNG FIXED COST NA KAILANGANG BAYARAN
*CONTRIBUTION MARGIN YUNG KAILANGAN PARA MACOVER YUNG FIXED COST

SALES MIX RATIO

- EXAMPLE: 1-1-3 OF PRODUCTS X Y AND Z
- THEN FOR EVERY UNIT SOLD OF PRODUCT X, PRODUCT Y AND PRODUCT Z WILL SELL 1
AND 3 UNITS EACH RESPECTIVELY

MARGIN OF SAFETY
- YUNG PLANNED NATIN NA LAYO NG LEVEL OF SALES SA BREAKEVEN
- MEASURES KUNG GAANO PA TAYO KALAYO FROM THE DANGER ZONE OR THE LOSS
AREA
- MEASURES RISK (DAPAT MATAAS PARA DI KA MAGKALOSS IN CASE MAY GUSTO KANG
GAWING VENTURE SA BUSINESS MO NA MEDYO RISKY

OPERATING LEVERAGE FACTOR

- MEASURE OF THE SENSITIVITY OF SOMETHIN RELATION WITH ANOTHER
- SENSITIVITY OF PROFIT IN RESPONSE TO CHANGES IN SALES
- GAANO BA KALAKI YUNG IGAGALAW NG PROFIT KAPAG LUMAKI YUNG SALES AND VICE
VERSA

 OLF = TOTAL CONTRIBUTION MARGIN / PROFIT BEFORE TAX

 % CHANGE IN PROFIT = % CHANGE IN SALES * OLF