Breakeven and Contribution Margin
Breakeven units, breakeven revenue, contribution margin per unit, CM ratio, margin of safety.
Example
You enter
- Fixed costs (USD) 50000
- Variable cost per unit (USD) 8
- Sale price per unit (USD) 20
You get
- Contribution margin per unit $12
- Contribution margin ratio 60%
- Breakeven units 4166.67
Checked against published worked examples from: OpenStax (Rice University).
Details, formula, and sources
Formula or tableContribution margin = sale_price - variable_cost. CM ratio = CM / sale_price. Breakeven units = fixed_costs / CM. Breakeven revenue = breakeven_units * sale_price. Margin of safety = (target - breakeven) / target.
Source and editionStandard cost-volume-profit identity. First principles.
Free accessNo code citation required (arithmetic).
What governsEstimate. Verify before sending to your bookkeeper, banker, or CPA.
API field namesfixed_costs, variable_cost_per_unit, sale_price_per_unit, contribution_margin, contribution_margin_ratio, breakeven_units
- Linearity fixed costs constant, variable cost / unit constant, sale price constant in the relevant rangeCVP modeling convention