Work out target profit sales instantly with clear inputs, formula shown and shareable results.
Target profit volume extends break-even analysis: instead of covering fixed costs alone, the contribution per unit must cover fixed costs plus the profit you have committed to. Divide the combined figure by contribution per unit to get the volume.
Units required
Units = (Fixed costs + Target profit) / (Price - Variable cost)
Contribution margin ratio
CM ratio % = (Price - Variable cost) / Price x 100
Then no volume achieves the target — every extra sale loses money. Either raise price or cut variable cost first.
Use pre-tax profit here. If you have an after-tax goal, divide it by (1 - tax rate) before entering it.