Contribution Margin = Sales Revenue – Variable Costs
Contribution Margin per Unit = Selling Price per Unit – Variable Cost per Unit
Contribution Margin Ratio = Contribution Margin ÷ Sales Revenue
Contribution Margin Ratio = (Selling Price per Unit – Variable Cost per Unit) ÷ Selling Price per Unit
Total Contribution Margin = Total Sales Revenue – Total Variable Costs
To compute it, identify the selling price, variable cost, and units sold
Multiply contribution margin per unit by the number of units sold to get total contribution margin
Use the contribution margin ratio to find the percentage of each sales dollar available to cover fixed costs and profit