Lo 3.1define and explain contribution margin on a per unit basis.

CM per unit= per unit sales price - variable cost per unit

Explanation:

Contribution margin is  value realized or left over which first cover fixed costs first and then is realized as profit. OR

The amount by which a product’s selling price exceeds its total variable cost per unit and can be calculated either in dollars (currency value) or as a percentage.

For example, if a Manufacturer sells its products for $200 and incurs variable costs of $20 per unit. In order to calculate their per unit contribution margin, we use the formula

Their CM Per unit would be $180 after subtracting their variable cost.

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