Total Contribution Margin = Total Sales Total Variable Expense

= (Selling Price per Unit Variable Expense per Unit) * Number of Units
= Contribution Margin Ratio * Total Sales

Contribution Margin per Unit = Total Contribution Margin / Total Unit Sold
= Selling Price per Unit Variable Expense per Unit

Contribution Margin Ratio = (Total Sales Total Variable Expense) / Total Sales
= (Selling Price per Unit Variable Expense Per Unit) / Selling Price per Unit
= 1 Variable Expense Ratio

Variable Expense Ratio = Total Variable Expense / Total Sales

= Variable Expense Per Unit / Selling Price Per Unit
= 1 Contribution Margin Ratio

Break-Even Point (BEP)

Equation Method (in Units) Profit = (CM per unit * BEP) Fixed Expense [where Profit = 0]
Equation Method (in Pesos) Profit = (CMR * BEP) Fixed Expense [where Profit = 0]
Formula Method (in Units) BEP = Fixed Expense / CM per unit
Formula Method (in Pesos) BEP = Fixed Expense / CMR

Target Profit
Equation Method (in Units)
Equation Method (in Pesos)
Formula Method (in Units)
Formula Method (in Pesos)
Profit = (CM per unit * Units) Fixed Expense
Profit = (CMR * Peso Sales) Fixed Expense [where Profit = 0]
Units= Fixed Expense + Target Profit/ CM per unit
Peso Sales = Fixed Expense + Target Profit / CMR

Margin of Safety

Margin of safety (pesos) Total sales - BEP (pesos)

Margin of safety (units) Total units BEP (units)
Margin of safety (%) Margin of safety (Pesos) / Total Sales
Margin of safety (units) / Total Units

DEGREE OF OPERATING LEVERAGE

Degree of Operating Leverage Contribution Margin / Net Operating Income

PESO CHANGE IN NET OPERATING INCOME

STEP ONE: DOL = Contribution margin / NOI
STEP TWO: % inc (dec) in NOI = DOL * % inc (dec) in sales
STEP THREE: Peso inc (dec) in NOI = % inc (dec) in NOI * current NOI
STEP FOUR: Proposed NOI = Current NOI + Peso inc (dec) in NOI

DOL = Degree of Operating Leverage

NOI = Net Operating Income

SALES MIX RATIO

Sales Mix Ratio Sales (Product A)/ Total Sales (Sales Mix)