# Contribution margin (CM) calculator

 Selling price per unit: Variable cost of goods sold per unit: Variable non-manufacturing expenses per unit: Actual or projected units sold: Please like us on facebook

## How to use contribution margin calculator:

### Inputs required:

Following is a list of inputs that you must provide to use contribution margin (CM) calculator.

Selling price per units:
The price at which a business offers its product for sale in the normal course of business. It is not subject to any discount offered on bulk orders etc.

Variable cost of goods sold (COGS) per unit:
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. 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.

Variable non-manufacturing expenses:
These include variable expenses incurred on marketing and selling activities. 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.

Actual or projected units sold:
Contribution margin is calculated to review either past performance or future profitability forecasting. If company is going to evaluate its past performance, this field should be filled with actual units sold for a particular past period. 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.

### Outputs to be generated:

Following is a list of outputs that CM calculator will generate for you.

Contribution margin per unit:
It is the contribution margin that company earns for every single unit that is sold at a particular selling price.

Total contribution margin:
It is the contribution margin that company generates on total units sold for a particular past or projected period.

Contribution margin ratio:
The ratio of contribution margin to sales revenue. 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.

Contribution margin as a percentage of sales revenue:
Contribution margin ratio when expressed in percentage is known as contribution margin percentage. It tells us what percentage the contribution margin of sales revenue is.

Total sales revenue:
It is total actual or projected sales revenue for a particular period of time.

Variable cost per unit:
Total of per unit variable manufacturing and non-manufacturing costs.

Total variable cost:
Total variable cost (both cost of goods sold and non-manufacturing expenses) incurred to generate total sales revenue for past or future period.

### 5 Thoughts on Contribution margin (CM) calculator

1. Reg Whelan

I was searching for a way to calculate a selling price for a single item that includes known acquisition and delivery expenses and two variable costs expressed as a %of selling Price and also a profit margin of say 10% of selling price or higher preferably.
I could guess a figure and calculate the %of that figure and see if the remainder equals the total of the fixed known expenses. but I would need to be calculating for an excessive amount time.
I need to program a spread sheet so that I enter the known costs including the %of SP(3.15) taken by PayPal and the %of SP(9.9) taken by eBay and the % of SP I want as gross profit
Thanks Reg

2. Accounting For Management

The answer to your question is performing a target profit analysis.

The following pages might be helpful.

These pages will give you a basic idea of relationship among cost volume and profit. You can adjust the equation discussed on these pages according to your need.

3. Reg Whelan

Hi,
I need to apologize to you.My last sentence is incomplete and leads to ambiguity. Sorry.

“I need to program a spread sheet so that I enter the known costs including the %of SP(3.15) taken by PayPal and the %of SP(9.9) taken by eBay and the % of SP I want as gross profit”

I should have Written it as follows.
I need to program a spread sheet so that I enter the known costs including the %of SP(3.15) taken by PayPal and the %of SP(9.9) taken by eBay and the % of SP I want as profit to calculate the selling price of a single item.
I should have also mentioned that this calculation is for a “LifeStyle Business” (I’m told). In my case I am a pensioner building an online business from my residence and the overheads are being met in my living expenses paid from my pension. There limitations to what the government will pay and as the business income grows the the pension will be reduced until the business can replace the pension altogether.
As another example of a lifestyle business. A business is started by a person living on an income from investments. They start this sort of home selling business to improve their lifestyle further.
Yet others would possibly make items at home for sale or grow plants for sale or grow and sell vegetables. I’m sure that there would other examples of a lifestyle businesses that meet their overheats from outside the business until after the business grows sufficiently to be moved to their own premises and have to meet it’s own overheads.

You will be pleased(or even displeased) to know that after thinking about what I wrote I was able to complete a spread sheet that does all the calculations I need based on a guess and All I have to do is adjust my guess up or down until I arrive at a figure that gives me a selling price that includes a %of SP as the profit margin I set. Should the %s I have to pay out vary than I just need to enter the new %s and the spread sheet easily will accommodate the changes without altering the formulas. When I enter a guess the spread sheet calculates a Selling Price and it tells me if I need to go higher or lower.
Those formulas you provided will come in handy when i am able to expand into a shop or warehouse etc.

Thanks for taking time to respond.
Reg

4. DJ

Assuming no direct factory overhead costs (i.e., inventory carry costs) and \$3 million dollars in combined promotion and sales budget, the Camp product manager wishes to achieve a product contribution margin of 35%. Given their product currently is priced at \$35.00, what would they need to limit the material and labor costs to

5. GAY

UNIT CONTRIBTUION MARGIN