| Break-even point | The level of sales at which profit is zero. The break-even point can also be defined as the point where total sales equals total expenses or as the point where total contribution margin equals total fixed expenses.
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| Contribution margin method | A method of computing the break-even point in which the fixed expenses are divided by the contribution margin per unit.
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| Contribution margin ratio (CM ratio) | The contribution margin as a percentage of total sales.
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| Cost-volume-profit (CVP) graph | The relationships between an organization's revenues, costs, and level of activity presented in graphic form.
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| Degree of operating leverage | A measure, at a given level of sales, of how a percentage change in sales volume will affect profits. The degree of operating leverage is computed by dividing contribution margin by net operating income.
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| Equation method | A method of computing the break-even point that relies on the equation Sales = Variable expenses + Fixed expenses + Profits.
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| Incremental analysis | An analytical approach that focuses only on those items of revenue, cost, and volume that will change as a result of a decision.
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| Margin of safety | The excess of budgeted (or actual) sales over the break-even volume of sales.
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| Operating leverage | A measure of how sensitive net operating income is to a given percentage change in sales. It is computed by dividing the contribution margin by net operating income.
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| Sales mix | The relative proportions in which a company's products are sold. Sales mix is computed by expressing the sales of each product as a percentage of total sales.
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