CVP Relationships in Equation Form

The formula for Net Operating income is: Profit = (Sales - Variable expenses) - Fixed expenses
or if the company has only one product, the this formula can be expressed as: 1) Sales = Selling price per unit X Quantity sold = P X Q , and Variable expenses = Variable expenses per unit X Quantity sold = V X Q, or 2) Profit = ( P X Q - V X Q) - Fixed expenses.

To determine the profit sales we will need to use this formula: Profit = unit CM X Q - Fixed expenses