How do I get the contribution margin and how do I get the breakeven?
See attached file for full problem description.
(1) Contribution margin: a cost accounting concept that allows a company to determine the profitability of individual products.
It is calculated as follows:
(Product Revenue - Product Variable Costs)/Product Revenue
So in our case, it would be:
Product Revenue - Product Variable Costs = ...
The logic, process and computations given.