How to Calculate Contribution Per Unit

Written by rick paulas
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How to Calculate Contribution Per Unit
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Contribution per unit is a measurement used in business to determine how much each unit sold is contributing to the overall sales of the company. A company can use this to determine how many units they must sell in order to reach a break-even point, allowing them to make a profit.

Skill level:
Easy

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Things you need

  • Amount of units sold
  • Revenues of units sold
  • Cost of production
  • Calculator

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Instructions

  1. 1

    Divide the amount of total sales by the amount of units sold to give you your revenues per unit. For example, if you have £260 in total sales, and have sold 100 units, that means your revenue per unit sold is £2. In other words, you're getting £2 for every unit that you sell.

  2. 2

    Divide the amount of total costs of production by the amount of units sold to give you your costs per unit. For example, if it cost a total of £130 to produce and you have 100 units, that means your cost per unit is £1.30. In other words, every unit you produce costs you £1.30.

  3. 3

    Subtract the revenue per unit by the cost per unit to get the contribution per unit. For example, if you subtract £2 (the revenue per unit from Step 1) by £1.30 (the cost per unit from Step 2) you get £1.30. In other words, you get £1.30 in profit per unit sold. This is your contribution per unit.

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