Cost and Revenues Ratio - name and calculation
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| Margin of Safety (units) | Budgeted (or actual) sales - Break even sales | The maximum number of units that the company can stop selling and not make a loss
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| Margin of Safety (%) | (Budgeted sales - Breakeven sales) / Budgeted sales | The maximum % of sales that the company can stop selling and not make a loss.
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| Contribution | Sales - variable costs | The amount of money that contributes to the fixed costs.
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| Target profit units | (Fixed costs + Target Profit)/ Contribution per unit | The number of units that a company needs to sell in order to reach a set level of profit.
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| Profit | Contribution - fixed costs | What remains after deducting all costs
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| Break - even point (£) | (Fixed costs/ contribution per unit) x sales price per unit | the point in £ at which all fixed costs are covered and no profit or loss is made.
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| Break - even point (units) | Fixed costs/Contribution per unit | The point in units at which all fixed costs are covered and no profit or loss is made.
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| Profit Volume Ratio | Contribution/Sales x100 | Contribution expressed as a percentage of sales.
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Created by:
KayeDavis
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