Total variable cost (both cost of goods sold and non-manufacturing expenses) incurred to generate total sales revenue for past or future period. Total of per unit variable manufacturing and non-manufacturing costs. It is total actual or projected sales revenue for a particular period of time. It tells us what percentage the contribution margin of sales revenue is. It can be computed by either dividing contribution margin per unit by the sales revenue per unit or total contribution margin by total sales revenue for a specific period.Ĭontribution margin as a percentage of sales revenue:Ĭontribution margin ratio when expressed in percentage is known as contribution margin percentage. Whereas b is the slope of the line and it equals the average variable cost per unit of activity. The ratio of contribution margin to sales revenue.
Therefore, the variable cost per unit is Sh. Example: Calculate the variable cost per unit of 5 coaches whose total variable cost is Sh. Variable cost per unit is calculated by dividing the total variable cost by the number of units. It is the contribution margin that company generates on total units sold for a particular past or projected period. Formula to calculate variable cost per unit. It is the contribution margin that company earns for every single unit that is sold at a particular selling price. Outputs to be generated:įollowing is a list of outputs that CM calculator will generate for you. On the other hand, if company is going to look into future, this field should be filled with number of units that company hopes to sell during a particular future period. If company is going to evaluate its past performance, this field should be filled with actual units sold for a particular past period.
Any expense that is variable in nature but does not fall under marketing and selling expenses should also be included in variable non-manufacturing expenses while using above calculator.Ĭontribution margin is calculated to review either past performance or future profitability forecasting. These include variable expenses incurred on marketing and selling activities. For merchandising companies, it includes cost of merchandise sold and the related expenses incurred to get the goods ready for sale such as freight in, wages for loading and unloading the goods. It includes all variable expenses incurred to manufacture a product i.,e, direct materials (including transportation, loading and unloading), direct labor and variable portion of manufacturing expenses. Variable cost of goods sold (COGS) per unit: It is not subject to any discount offered on bulk orders etc. We will go with a conservative estimate and of 50,000 per hour, even though downtime. The price at which a business offers its product for sale in the normal course of business. Now add a fourth variable, estimated downtime (D).
VARIABLE COST PER UNIT CALCULATOR ONLINE HOW TO
How to use contribution margin calculator: Inputs required:įollowing is a list of inputs that you must provide to use contribution margin (CM) calculator.
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