Log in

View Full Version : Contribution Margin Analysis


Imhiding
Nov 21, 2011, 05:55 PM
Contribution Margin Analysis

I am totally lost. I do not know where to begin. Can someone please point me in the right direction?

Sales Volume (units) 24,000
Sales price per unit $10
Variable Costs (Total) ?
Contribution Margin (Total) ?
Cont. Margin per unit (rounded) $4
Fixed Costs (total) ?
Fixed Costs per unit (rounded) ?
Profit $20,000

How do I find the Variable Costs (total)?
How do I find the Cont. Margin (total)?
How do I find Fixed Costs (total)?
How do I find Cost per unit (rounded)?

If the exercise above were changed around, and the Sales Volume (units) was missing, and I had the sales price per unit and the variable costs (total), how do I solve for the Sales Volume? Of Contribution margin (total), fixed costs (total), or the profit?

What am I missing? If I needed to find the sales price per unit, what do I need to calculate? What if I needed the Contribution margin per unit, fixed costs (total) or fixed costs per unit?

It can’t be as difficult as I see it now – can it? Please point me in the right direction.

Thanks

ArcSine
Nov 22, 2011, 05:54 AM
Everything you need to fill in all the blanks comes from two simple equations:

Sales price per unit, minus variable cost per unit, equals contribution margin per unit.

Total sales, minus total variable costs, minus total fixed costs, equals profit.

Start by using the first equation to determine the variable cost per unit. Then, knowing that volume is at 24,000 units, you can easily answer total variable costs.

I'll bet you can take it from here.