The total contribution margin is $30,000.
What is contribution margin?
- A gross or per-unit basis might be used to express the contribution margin. It indicates the additional revenue made for each product or unit sold after the variable element of the business's costs have been subtracted.
- The selling price per unit less the variable cost per unit is the contribution margin. The metric, also known as dollar contribution per unit, shows how a specific product affects the company's overall earnings.
- It offers a means of demonstrating the potential for profit of a specific product being offered by a business and displays the percentage of sales that goes toward playing the business fixed costs. Profit is the amount that remains after fixed expenses have been paid.
Given, Selling price per unit, $35 − $20 variable = $15.
contribution margin per unit × 2,000 units sold = $30,000.
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