Log in

View Full Version : Contribution margin


rtieritoa
Oct 4, 2007, 06:52 AM
How to calculate the contribution per unit of certain product? for instance, variable cost are $30 per unit, the price is $45, and fixed costs are $90000

1.what is the contribution margin
2.how many units must be sell to break-even?
3.if 6300 units sold, what is the net profit?

Greentree101
Oct 4, 2007, 11:14 AM
1. Contribution Margin = Price - Variable cost = 45-30=15

2. Break-even = Fixed cost / contribution margin = 90000/15 = 6000 units

3. Net profit for 6300 units = (6300*contribution margin)- fixed cost = 94500 - 90000 = 4500.