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Contribution margin refers to the price you need to add to the rest of the product costs after selling some; if you want to calculate it, you will have to know some production cost values & then apply the formula.
You have to deduct variable price per product from price per product to know the cost margin & it’s a thing you should never forget to calculate.
What Are the Purposes of Contribution Margin Calculator Online?
The uses of the contribution margin calculator is quite simple; they are:
- You have to know the value to add on your products that will help your brand to avoid loss.
- Moreover, you can control the pricing if you know both things; if you do it online, you won’t have to buy an expensive one.
How to Calculate The Contribution Margin and Ratio?
To get the contribution margin ratio manually you need to know that formula. Here I will show you the formula how to calculate it manually by it’s percentage formula.
Contribution margin formula= (Per unit sales price x Number of Units) – (Variable Costs per Unit x Number of Units)
Contribution margin ratio percentage formula= Contribution Margin ÷ (Per units sales price x Number of Units)
Profit generate formula= Contribution margin – Fixed cost.
Contribution Margin Calculation Example:
To see the live calculation please see the below example.
Supposed:
- Per Unit Sales price: 100
- Variable cost per Unit: 8
- Number of Units: 12
- Fixed cost: 0
Now see how our calculator calcuate the data.
Contribution margin= (100 x 12) – (8 x 12)
= 1200 – 96
= 1104
Contribution margin ratio= 1104 ÷ ( 100 x 12)
= 1104 ÷ 1200
= .92
That means 92%. Because if we want to calculate it in percentage then we need to multiply it by 100%. So, .92 x 100%= 92%
Profit generate= 1104 – 0
= 1104
Because our fixed cost value was 0.
Contribution Margin Calculation Formula Excel:
You can easily calculate the contribution margin in excel by the below formula.
Contribution margin= (Per unit sales price * Number of Units) - (Variable Costs per Unit * Number of Units)
At first design your excel sheet like the below table:
| A | B | |
| 1 | Per Unit Sales price: | |
| 2 | Variable cost per Unit: | |
| 3 | Number of Units: | |
| 4 | Fixed cost: | |
| 5 | Contribution margin: | =B1 * B3 – B2 * B3 |
| 6 | Contribution margin ratio: | =B5 / (B1 * B3) |
Example:
If your input data 100, 8, 12, 0 then your calcuation would be
= B1 * B3 – B2 * B3
=100 * 12 – 8 * 12
= 1200 – 96
= 1104
How To Calculate Contribution Margin Ratio in Excel?
You can also calculate the ratio. To calculate the ratio type the below formula on B6 cell.
=B5 / (B1 * B3)
Unfortunately still if you can’t understand then look the below screenshot.
