Formulas for Cost Volumn Profit Analysis

Basic Formulas:


Formulas for Cost Volumn Profit Analysis

Sales = Sales unit × umit price

Variable cost = sales unit × VCPU

Contribution Margin = sales – variable cost

Contribution Margin = Fixed cost + Net profit

Net Profit ( before tax) = Sales – Variable cost – fixed cost
= Sales – Total cost

Net profit before tax = Contribution Margin – Fixed Cost

Fixed cost = Contribution Margin – Net profit

1) Profit Volumn Ration / Contribution Margin Ratio

It is the proportion of contribution margin on sales:

i) P/V ratio/ CM ratio = Total CM/ Total sales

ii) = SPPU –VCPU/ SPPU ( IF SPPU AND VCPU IS GIVEN)

iii) = Difference in profit / Difference in Sales ( if two years data are given)

iv) = 1- CV ratio ( where CV = variable cost ratio)

2) CV/VC Ratio( Variable cost ratio:
It is proportion of variable cost on sales.

i) VC Ratio = Total Variable Cost / Total Sales ( if total is given )

ii) = VCPU/SPPU ( if per unit is given)

iii) 1- PV ratio

PV ratio + VC ratio = 1

iv) = Difference in cost / Difference in Sales Rs

v) Contribution Margin Per Unit:

CMPU= SPPU- VCPU

CMPU= Total contribution Margin/ Total sales umit

CMPU= Differene in profit/ Difference in sales unit

3) Required Sales unit Rs. To each the ( desire)

Sales – VC – FC = Profit

S.U ( SPPU- VCPU) = FC + PROFIT

MAIN FORMULA:

Sales Unit = FC + Profit / SPPU- VCPU

S.U = F.C + desire Profit/ CMPU

Sales Rs. = FC + desire Profit / PV ratio


4) Break Even Point ( BEP)

Sales unit ( BEP umit) = FC/ SPPU- VCPU

Required sales unit or RS. To earn profit after tax:

BEP Sales unit = FC +Profit after tax/1-tax rate

CMPU

Sales Rs = FC +Profit after tax/1-tax rate
PV Ratio

5) BEP ratio = BEP Rs./ Sales Rs.

6_) BEP ratio + MOS ratio = 1 ( where MOS = Margin of seftey.)

7) PV ratio = Profit/ MOS Rs

8) CMPU = Profit / MOS unit

9) MOS unit = Sales unit – BEP units

10) MOS RS. = Sales Rs. – BEP Rs.

11) BEP ratio = BEP Rs/ Sales Rs

12) MOS ratio = MOS Rs/ Sales Rs

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About Dinesh Lamichhane

आफ्नो परिचय खोज्नको लागी भौतारिरहेको एक आम मान्छे । भाग्यमा भन्दा कर्ममा बिश्वास गर्छु । परिचय सँगै जिवन लाई पनि बुझ्दैछु, र आफुलाई खुशी राख्ने सक्दो कोसिस गरिरहेको हुन्छु । नयाँ नयाँ ठाँउहरु घुम्न धेरै मन पर्छ । अँ कहिले काँहि मनमा लागेजति कुराहरु लेख्ने गर्छु र लेखेको कुराहरु यहि राखेको हुन्छु । हेरेपछी सुझाव दिन नबिर्सनुहोला ।