Breakeven and Contribution Margin

Breakeven units, breakeven revenue, contribution margin per unit, CM ratio, margin of safety.

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Formula and source

Contribution 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.

Standard cost-volume-profit identity. First principles.

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