The Point of

Time where
business gets
neither profit
nor loss
 Total Costs = Fixed Costs + Variable
Costs
COSTS ANALYSIS
Sales Price = Total Costs + Profit

Sales Revenue = Sales Price * No. of

Units Sold

Contribution = Sales – Variable Costs

(or) Fixed Costs + Profits
A Contribution of sales is overall profit
for business including fixed costs.

When Contribution becomes after

fixed costs is Net Profit. Where the
Total Sales Revenue meets the Total
costs is called Break-even Point or
Angle of Incidence.
 1. To find Contribution:

a. Sales Price – Variable Cost

per Unit
Formulas:
b. Total Sales – Total Variable
Cost
c. Fixed Costs + Profits
2. To find Contribution Ratio (or)
Profit/Volume Ratio (P/V Ratio):
𝑆𝑎𝑙𝑒𝑠 𝑃𝑟𝑖𝑐𝑒−𝑉𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝐶𝑜𝑠𝑡𝑠
a. × 100
𝑆𝑎𝑙𝑒𝑠 𝑃𝑟𝑖𝑐𝑒

𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑝𝑒𝑟 𝑈𝑛𝑖𝑡

b. × 100
𝑆𝑎𝑙𝑒𝑠 𝑝𝑟𝑖𝑐𝑒

𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛
c. × 100
𝑇𝑜𝑡𝑎𝑙 𝑆𝑎𝑙𝑒𝑠 𝑅𝑒𝑣𝑒𝑛𝑢𝑒

𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑃𝑟𝑜𝑓𝑖𝑡
d. × 100
𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑇𝑜𝑡𝑎𝑙 𝑆𝑎𝑙𝑒𝑠
3. To find Break-Even Point
in terms of Product Units:

𝑇𝑜𝑡𝑎𝑙 𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡𝑠

a.
𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡

b. Total Sales Units – Margin of Safety Units

4. Break-Even Point in terms
of Sales Revenue:
𝑇𝑜𝑡𝑎𝑙 𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡𝑠
a. 𝑃
𝑅𝑎𝑡𝑖𝑜
𝑉

b. Total Sales Revenue – Margin of Safety Revenue

c. Break even volume X Sales Price

5. To find Break-Even % of Sales:

𝐵𝑟𝑒𝑎𝑘 𝐸𝑣𝑒𝑛 𝑆𝑎𝑙𝑒𝑠 𝑅𝑒𝑣𝑒𝑛𝑢𝑒

a. × 100
𝑇𝑜𝑡𝑎𝑙 𝑆𝑎𝑙𝑒𝑠 𝑅𝑒𝑣𝑒𝑛𝑢𝑒

𝐵𝑟𝑒𝑎𝑘 𝐸𝑣𝑒𝑛 𝑆𝑎𝑙𝑒𝑠 𝑈𝑛𝑖𝑡𝑠

b. × 100
𝑇𝑜𝑡𝑎𝑙 𝑆𝑎𝑙𝑒𝑠 𝑈𝑛𝑖𝑡𝑠
6. To find Margin of Safety
a. In terms of Product Units:
Total Sales Units – Break-even Units
b. In terms of Product Revenue:
a. Total Sales Revenue – Break-even Revenue

𝑃𝑟𝑖𝑓𝑖𝑡
b. 𝑃
𝑅𝑎𝑡𝑖𝑜
𝑉
c. In % of Sales:
𝑀𝑂𝑆 𝑆𝑎𝑙𝑒𝑠 𝑅𝑒𝑣𝑒𝑛𝑢𝑒
a. × 100
𝑇𝑜𝑡𝑎𝑙 𝑆𝑎𝑙𝑒𝑠 𝑅𝑒𝑣𝑒𝑛𝑢𝑒

𝑀𝑂𝑆 𝑆𝑎𝑙𝑒𝑠 𝑈𝑛𝑖𝑡𝑠

b. × 100
𝑇𝑜𝑡𝑎𝑙 𝑆𝑎𝑙𝑒𝑠 𝑈𝑛𝑖𝑡𝑠
9.To Get Desired Profit sales in Units:
𝑇𝑜𝑡𝑎𝑙 𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡𝑠+𝐷𝑒𝑠𝑖𝑟𝑒𝑑 𝑃𝑟𝑜𝑓𝑖𝑡
𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑝𝑒𝑟 𝑈𝑛𝑖𝑡

10.To Get Desired Profit sales in Revenue:

𝑇𝑜𝑡𝑎𝑙 𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡𝑠+𝐷𝑒𝑠𝑖𝑟𝑒𝑑 𝑃𝑟𝑜𝑓𝑖𝑡

𝑃
𝑅𝑎𝑡𝑖𝑜
𝑉
 11. To Get Fixed Costs:
Break-even Sales X P/V Ratio

12. To get Profit Amount:

a. MoS Revenue X P/V Ratio
b. Total Contribution – Total Fixed Costs