This is the unit variable cost at a production level of 2 units. The total contribution margin equals total revenue minus total variable costs.
This is fixed costs on a per unit basis. The total contribution margin equals total revenue minus total variable costs.
The unit contribution margin is unit sales price ? unit variable costs. The sales price of $90 less variable costs per unit of $70 equals a unit contribution margin of $20. If 2 units are produced and sold, the total contribution margin would be $20 × 2 units = $40 total contribution margin.
The total contribution margin equals total revenue minus total variable costs. The total variable cost is not $85 + $70. The information on each line in the variable unit cost column applies to all units produced at that given production level, not just the incremental unit produced. In other words, if one unit is produced, the variable cost to produce that one unit will be $85 in total. If two units are produced, the variable cost to produce those two units will be $70 × 2 in total. If three units are produced, the variable cost to produce those three units will be $65 × 3 in total, and so on.
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If two units of product were produced and sold, the total contribution margin would be:
