Cost-Volume-Profit (CVP) Calculator

Enter any 3 values to calculate the missing variable

Input Variables

Retail Price ($)

Number of Units

Total Revenue ($)

Fixed Costs ($)

Variable Costs ($)

Total Costs ($)

CVP Results

Profit

$0

Contribution Margin

0%

Break-Even Point (Units)

0

Break-Even Revenue

$0

Margin of Safety

0%

This calculator helps analyze the relationship between costs, volume, and profit. Print Report

A Cost-Volume-Profit (CVP) Calculator is a financial tool that helps businesses analyze how changes in costs, sales volume, and prices affect profitability. It is widely used in budgeting, pricing strategies, and break-even analysis to make informed business decisions.

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Key Components of a CVP Calculator

1. Fixed Costs (FC)

   • Expenses that do not change with production/sales volume (e.g., rent, salaries, insurance).

2. Variable Costs per Unit (VC)

   • Costs that vary directly with production/sales (e.g., raw materials, labor per unit).

3. Selling Price per Unit (P)

   • The price at which each unit is sold.

4. Sales Volume (Q)

   • The number of units sold (actual or projected).

5. Contribution Margin (CM)

   • CM per Unit = P – VC

   • Total CM = (P – VC) × Q

6. Break-Even Point (BEP)

   • BEP (Units) = FC / (P – VC)

   • BEP (Revenue) = BEP (Units) × P

7. Target Profit Analysis

   • Required Sales for Target Profit = (FC + Target Profit) / (P – VC)

8. Margin of Safety (MoS)

   • MoS (Units) = Actual Sales – BEP Sales

   • MoS (%) = (MoS in Units / Actual Sales) × 100

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How a CVP Calculator Works (Step-by-Step Example)

Scenario: A company sells handmade candles.

• Fixed Costs (FC): $10,000/month

• Variable Cost per Unit (VC): $5

• Selling Price per Unit (P): $20

• Desired Target Profit: $5,000

Step 1: Calculate Contribution Margin (CM)

• CM per Unit = P – VC = $20 – $5 = $15

Step 2: Determine Break-Even Point (BEP)

• BEP (Units) = FC / CM = $10,000 / $15 ≈ 667 units

• BEP (Revenue) = 667 × $20 = $13,340

Step 3: Calculate Sales Needed for Target Profit

• Required Sales = (FC + Target Profit) / CM

• = ($10,000 + $5,000) / $15 = 1,000 units

Step 4: Margin of Safety (If Actual Sales = 1,200 Units)

• MoS (Units) = 1,200 – 667 = 533 units

• MoS (%) = (533 / 1,200) × 100 ≈ 44.4%

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Benefits of Using a CVP Calculator

✅ Pricing Strategy – Helps determine optimal pricing by analyzing cost structures.
✅ Profit Planning – Estimates sales needed to achieve desired profits.
✅ Cost Control – Identifies how changes in fixed/variable costs impact profitability.
✅ Risk Assessment – Measures the margin of safety before losses occur.
✅ Decision-Making – Evaluates the financial viability of new products or business expansions.

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CVP Analysis Assumptions

• Linear Costs & Revenues – Assumes costs and revenues change proportionally with volume.

• Constant Sales Mix – If selling multiple products, the ratio remains unchanged.

• No Inventory Changes – All units produced are sold (no leftover stock).

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Practical Applications

• Startups – Determines feasibility before launching.

• Manufacturing – Optimizes production levels for profitability.

• Retail & E-commerce – Evaluates discounting strategies.

• Service Businesses – Assesses pricing for hourly services.