Contribution is used to work out break even

• Contribution per unit

  The difference between the selling price of a product and the variable costs it takes to produce it
• Calculating profit

  1. Contribution per unit = selling price - variable cost per unit

  2. Total contribution (contribution from all units sold) is used to pay fixed costs
• Calculating break-even point


  total fixed costs / contribution per unit
• IF THERE IS A DECIMAL ALWAYS ROUND UP TO A WHOLE NUMBER TO FIND THE FULL AMOUNT OF UNITS