Cost-volume-profit analysis formula

The formula of CVP analysis is operating profit = (unit price-unit variable cost) × business volume-fixed cost.

Cost-volume-profit analysis is the abbreviation of cost-output (or sales volume)-profit dependence analysis, also known as CVP analysis. It refers to the mathematical accounting model and graphic based on the variable cost calculation model, which reveals the internal law relationship among fixed cost, variable cost, sales volume, unit price, sales volume and profit, and provides the basis for accounting prediction and planning.

Cost-volume-profit analysis focuses on the quantitative relationship among sales quantity, price, cost and profit. The principles and methods it provides are widely used in management accounting, and it is also an important tool for enterprises to make decisions, plan and control.