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    rtieritoa's Avatar
    rtieritoa Posts: 2, Reputation: 1
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    #1

    Oct 4, 2007, 06:52 AM
    contribution margin
    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's Avatar
    Greentree101 Posts: 2, Reputation: 1
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    #2

    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.
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