How to Calculate the Contribution Margin Per Unit Sold With Total Revenue Amount

The unit contribution margin is a measurement of how much of the unit sales price contributes to the fixed costs of manufacturing the product. It is used to calculate the level of sales required to cover these fixed costs. To calculate the contribution margin per unit using total revenue, you will need to calculate the total contribution margin and convert it to a per-unit figure.

Instructions

1. Write down the total revenue. For example, assume that your total revenue was $50,000.

2. Add up the total variable costs for the product. Variable costs are any costs that change with production levels, such as direct laborer wages and materials.

3. Subtract your total variable costs from your total revenue to get the total contribution margin. for example, if your variable costs were $30,000, then you would subtract that from $50,000 to get a total contribution margin of $20,000.

4. Divide the total contribution margin by the number of units sold to get the unit contribution margin. For example, with the sale of 500 units you would divide $20,000 by 500 to get a per-unit contribution of $40.