Contribution Margin Calculator

Calculate Contribution Margin





Formula

The formula to calculate the contribution margin is:

\[ CM = (SP \cdot N) - (VC \cdot N) \]

Where:

What is Contribution Margin?

A contribution margin is defined as the difference between the revenue generated by an item and its associated variable costs. It helps in understanding how much of the revenue contributes to covering the fixed costs and generating profit.

Example Calculation

Let's assume the following values:

Using the formula to calculate the contribution margin:

\[ CM = (50 \times 100) - (30 \times 100) = 2000 \text{ $} \]

The contribution margin is $2000.