Back         FORMULAS Unit Contribution (Contribution Margin) The Unit Contribution is the amount of sales revenue, which is left to cover fixed expenses and profit after paying variable expenses.   Unit Contribution = Sales Price/Unit - Variable Cost/Unit Unit Contribution Ratio This is the Unit Contribution expressed as a percentage of the Sales Price   (Unit Contribution/Sales Price)*100 The (Budgeted) Operating Income   Budgeted Sales Revenue   -Total Variable Costs   ___________________________________   =Contribution Margin (Total Contribution)   ___________________________________   -Fixed Costs   ___________________________________   = Operating Income The Break-Even Point The Break-Even point is the volume of activity at which an organization's revenues and expenses are equal. This may be measured either in units or in dollars. In dollars, it expresses the needed Sales Revenue to cover the production costs. Expressed in units, it indicates the amount of units that have to be sold to "break-even". Mathematical Expression: x = units needed to be sold to break-even. BEP in UNITS:   =(Sales Price/Unit).x = (Variable Costs/Unit).x + Total Fixed Costs   =Total Fixed Costs/Unit Contribution BEP in $:   =Fixed Costs/[1 - (Total Variable Costs/Total Sales Revenue)]          Home    About    Contact    Legal Notice    © Copyright, 2001-, by Laurent Müllender. All rights reserved.