Canadian Company reports the following total costs at two levels of production 1. Indirect labour Costs 2. Property rates and taxes 3. Direct labour 4. Indirect material 5. Depreciation 6. Maintenance 5,000 Units 10,000 Units $3,000 $6,000 7,000 7,000 28,000 56,000 22,000 44,000 4,000 4,000 9,000 11,000 No Variable cost Fixed cost Mixed cost 1. 2. 3. 4. 5. 6. Formulas for the CVP analysis: Units selling price - Unit variable cost = Unit contribution margin Unit contribution margin/Unit selling price Contribution margin ratio Required sales- Variable costs-fixed costs Target net income Fixed cost+Target net income/Unit contribution margin ratio = Required sales Fixed cost + Target net income/Unit contribution margin = Required units Fixed cost/Unit contribution margin = Break-even points in units Required sales- Variable costs - Fixed costs = Net income Fixed cost/Unit contribution margin ratio =Break-even point in sales Actual (expected) sales- Break-even sales = Margin of safety Margin of safety/ Actual (expected) sales = Margin of safety ratio