On a per unit basis, this is calculated by dividing the product contribution margin by the product sales price (contribution margin ratio = contribution margin / product sales price). Since the contribution margin determines the portion of each sale left over for covering fixed costs, you can determine the number of units needed to cover fixed costs by dividing the total fixed costs by the total contribution margin.

# How do you calculate the "contribution margin ratio"?

Written by Bill S

Updated over a week ago

Updated over a week ago