Profit · Cost structure
Separate the costs.
See the leverage.
Measure how revenue contributes after variable costs—and how fixed costs amplify changes in operating income.
Period revenue→Revenue − variable costs − fixed costs→Contribution margin
Contribution margin
$80,000.00Contribution Margin Ratio40.0%
Contribution Per Unit$20.00
Operating Income$30,000.00
Degree Of Operating Leverage2.67×
Break Even Revenue$125,000.00
Margin Of Safety37.5%
Scenario Revenue$220,000.00
Scenario Operating Income$38,000.00
Scenario Income Change$8,000.00
Planning estimate only. Verify actual tax rules, prices, cash-flow timing, exchange quotes, fees, and accounting treatment for your business.Calculation method
Revenue minus variable costs funds fixed costs and profit.
Contribution margin ratio drives break-even revenue and the scenario assumes variable costs remain proportional to revenue. Degree of operating leverage divides contribution margin by operating income. Near break-even, that ratio becomes unstable and should not be treated as a forecast. The model excludes step costs, capacity limits, product mix shifts, taxes, financing, price elasticity, and nonlinear variable costs.