# Contribution Margin Calculator

Contribution Margin (%) Equal to selling price per unit (INR) multiple number of units (INR) less than variable costs per unit (INR) multiple number of units . contribution margin is the difference between the **sales revenue** and the **variable costs** of a product.

**The formula us,**

**Contribution Margin** = (Selling Price per Unit * Number of Units) – (Variable Costs per Unit * Number of Units)

## Calculate the Contribution Margin

Let’s say we have a company that produces** 200,000 units of a product, sells them at $12 per unit** and has a **variable costs of $7 per unit**.

Contribution Margin = (Selling Price per Unit * Number of Units) – (Variable Costs per Unit * Number of Units)

Contribution Margin = ($12 * 200,000) – ($7 * 100,000) = $24,00,000 – $700,000 = $17,00,000

The answer the Contribution Margin ratio

Contribution Margin Ratio = $1700,000 / ($12 * 200,000) = $400,000 / $24,00,000

** = 70.83% **