Total costs = Fixed costs + Total variable costs
Total Cost = Fixed Cost + (Volume * Variable Cost Rate)
Total Variable Cost = Volume * Variable Cost Rate
Variable Cost Rate (per unit) = Total Variable cost/Volume
Average Cost (per unit) = Total cost / Volume
Total Revenue = Volume * Price per unit
Profit = Total Revenue – Total Cost
Profit = (Volume*Price)-Fixed Cost-(Volume*Variable cost Rate)
Total Contribution Margin = Total Revenue-Total Variable cost
Contribution Margin per unit = Price per unit – Variable cost Rate
Breakeven Point in volume is the volume make the profit Equal zero
0 = (volume *Price per unit)-Fixed cost – (volume*Variable cost rate)
Simple equation:
Breakeven Point in volume = Fixed Cost / Contribution Margin per unit
The volume Need To achieve Desired Profit =
(Fixed Cost + Desired Profit)/ Contribution Margin per unit
Economic break even : (fixed cost + Desired profit)/ Contribution margin per unit
Profit and loss Contribution Margin format
Total Revenue (volume * price per unit)
Less : Total Variable Cost (Volume * Variable cost Rate)
= Total Contribution Margin
Less : Fixed Cost
= Net Profit or Loss
Notes : at Breake even point , Total Contribution margin = Fixed cost