Answer
Contribution Margin: It's the money available to cover fixed costs and generate profit, calculated as total revenue minus total variable costs.
Contribution Margin per Unit: The contribution each unit provides toward covering fixed costs and profit, calculated as the difference between the selling price and variable cost per unit.
Contribution Margin Percentage: The contribution margin expressed as a percentage of total sales revenue, showing the proportion of each sales dollar available for covering costs and profit.
Work Step by Step
Contribution Margin: It's the money available to cover fixed costs and generate profit, calculated as total revenue minus total variable costs.
Contribution Margin per Unit: The contribution each unit provides toward covering fixed costs and profit, calculated as the difference between the selling price and variable cost per unit.
Contribution Margin Percentage: The contribution margin expressed as a percentage of total sales revenue, showing the proportion of each sales dollar available for covering costs and profit.
