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What is contribution margin per unit? What is contribution margin ratio? Explain in 250 words

What is contribution margin per unit? What is contribution margin ratio? Explain in 250 words

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Answer #1

Contribution Margin per unit is difference between the selling price per unit & Variable cost per unit . It is calculated as Selling price per unit - Variable cost per unit. Variable Cost per unit includes all cost which are variable in nature such as Manufacturing cost & selling costs.

Contribution margin ratio is percentage of contribution per unit as divided by selling price per unit. It is calculated as Contribution margin per unit x 100 / Selling price per unit.

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