assignment cost volume and profit formulas

# assignment cost volume and profit formulas - The basic...

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The basic components of cost-volume-profit analysis are, volume or level of activity, unit selling price, variable cost per unit, total fixed costs, sales mix. The volume or level of activity is the amount of output or the amount of sales. The unit selling price is the price the company assigns or sets for selling its products. Variable cost per unit are the costs that stay fixed on a per unit basis but will vary on that per unit basis if the level of activity changes. The total fixed cost are those items that are fixed in total but vary on a per unit basis depending on the volume of activity. The Sales mix is the percentage in which each product is sold when the company sells more than just one product. According to the formula: Unit Contribution Margin (UCM) = Unit Sales Price – Unit Variable Cost, the UCM increases when the Sales Price increases. If a company is selling toy fish at \$10 per unit, and the variable cost per unit is \$4, then the contribution margin would be \$10- \$4=\$6. If the sales of the toy fish increase to \$12, then the contribution

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