What is Total Contribution?

Answer 1

Total contribution is .. When more than one unit is sold, the total contribution can be calculated. You work it out by: total revenue minus total variable = total contribution eg. 1,000 pair of trousers, variable costs are £7.50 per pair, sold at £9.00 per pair. = total contribution total revenue - total variable cost = (£9.00 x 1,000) - (£7.50 x 1,000) = 9,000 - 7,500 = £1,500 This £1,500 will contribute to the companies fixed costs & profit. Another way of working out the total contribution would be multiplying the unit contribution by the number of units sold. = total contribution unit contribution x number of units sold = (£9.00 - £7.50) x 1,000 = £1.50 x 1,000 = £1,500 Hope this helps :P