how to compute contribution per unit , in dollars and percentages
To compute the contribution per unit in dollars and percentages, you need two pieces of information: the total contribution and the number of units produced or sold.
Step 1: Determine the Total Contribution
The total contribution is the difference between the selling price per unit and the variable cost per unit. This figure represents the amount that each unit contributes towards covering fixed costs and generating profit.
Total Contribution = Selling Price per Unit - Variable Cost per Unit
Step 2: Calculate the Contribution per Unit in Dollars
To compute the contribution per unit in dollars, divide the total contribution (Step 1) by the number of units produced or sold.
Contribution per Unit (Dollars) = Total Contribution / Number of Units
Step 3: Determine the Contribution per Unit as a Percentage
To calculate the contribution per unit as a percentage, divide the contribution per unit (in dollars) by the selling price per unit and multiply by 100.
Contribution per Unit (Percentage) = (Contribution per Unit / Selling Price per Unit) x 100
By following these steps, you can easily compute the contribution per unit in both dollars and percentages.