Introduction to Business (BUSA 101) Break-Even, Contribution Margin, and CVP Analysis Study Guide
University of Southern California
Introduction to Business (BUSA 101) | Study Guide

Overview
A quick-sheet for BUSA 101 that helps you do break-even and cost-volume-profit (CVP) questions fast and explain the story behind the numbers.

Key topics
•fixed vs variable vs mixed costs
•contribution margin and CM ratio
•break-even in units and dollars
•target profit and margin of safety
•common CVP exam question patterns

Suggested study tasks
•classify costs from a scenario
•compute break-even units and sales dollars
•solve a target-profit CVP question
•compute margin of safety
•write one sentence interpreting what a higher CM ratio means

Common pitfalls
•mixing fixed and variable costs
•using total costs instead of per-unit amounts
•forgetting that break-even is profit equals zero
•changing multiple inputs without tracking assumptions