Contribution Margin Calculator
Contribution Margin Calculator: Assess Profitability
The contribution margin represents the difference between a company's total sales revenue and its variable costs, which are the costs that vary with the level of production or sales. The contribution margin is a critical metric for businesses as it helps assess the profitability of products, services, or business segments. Here's the formula to calculate Revenue:
Contribution Margin = Total Sales Revenue - Total Variable Costs
Total Sales Revenue: The total revenue generated from the sale of products or services.
Total Variable Costs: The sum of all costs that vary with changes in production or sales volume, such as direct materials, direct labor, and variable overhead.