![]() ![]() ![]() Selling 6,000 tickets allows them to breakeven. They actually want to make a profit in the upcoming quarter. Now let’s say the theater doesn’t want to merely breakeven. The cost volume profit equation shows us many important aspects of the business of the theater. This shows us that the theater must sell 6,000 tickets per quarter to break even. So we divide $30,000 of fixed costs by $5 contribution margin. ![]() This contribution margin can be used to pay down the theater’s fixed costs. That is, the theater makes five dollars per ticket sold. Cost-Volume-Profit (CVP) Model Cost Volume Profit Formula: Breakeven Sales Volumeīreakeven Sales Volume = Fixed Costs ÷ ( Sales Price – Variable Costs)īreakeven Sales Volume = Fixed Costs ÷ ( Contribution Margin)Īs you can see, the theater has a contribution margin of $5. ![]()
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