If filing married (joint or separate), enter combined taxable amount for you and your spouse.
The contribution margin is a concept used with breakeven point or in break-even analysis. In words, the contribution margin is the amount of money a company has to cover its fixed costs after it pays all of its variable expenses.ontribution Margin per unit of sales = Sales Revenue per Unit-Variable Expenses per Unit. Contribution Margin-Fixed Costs = Net Operating Profit or Loss. The break-even formula calculates the point at which a company's sales are zero-there is no profit or loss:
We use the contribution margin ratio to do this. Using the same example, variable expenses of $0.80 are 40% of sales of $2.00 per unit ($0.80/$2.00). To calculate breakeven in dollars, divide its fixed expenses by the contribution margin ratio of 60% ($60,000/.6 = $100,000).This means that the company has to make $100,000 in sales to breakeven. The contribution margin ratio is an important financial metric to calculate the profit potential for a business firm.If the dollar amount of sales increases by one dollar, in this example, the contribution margin increases by 60 cents.he contribution margin ratio is an important financial metric to calculate the profit potential for a business firm. If the dollar amount of sales increases by one dollar, in this example, the contribution margin increases by 60 cents.