The **Contribution Margin** is the difference between the **revenue** and **total variable cost**. **Contribution Margin** or **CM** is a significant feature to measure the progress of any organization. We can easily calculate the contribution margin in Excel for any company. In this article, we will demonstrate the process with two different examples. If you are interested to know about the process, download our practice workbook and follow us.

**Table of Contents**hide

## Download Practice Workbook

Download this practice workbook for practice while you are reading this article.

## What Is Contribution Margin?

The **Contribution Margin** is a term that shows us the difference between the **total sales** and the **total direct variable costs**. We can also state this term as the sum of the **fixed cost** and the **net profit.** This value helps us to predict the **break-even point** of any organization. We can calculate the value either per unit or for the entire batch.

The mathematical expression of the **Contribution Margin** for per unit product is:

Besides it, the general expression to determine the **Contribution Margin** for the entire batch is:

In addition, there is another formula to calculate the value of the **Contribution Margin,** which is:

## 2 Suitable Examples to Calculate Contribution Margin in Excel

To demonstrate the examples, we consider the dataset of some variables of a company. The total number of sold products is in cell **C5**, and **five** different types of variable costs are in the range of cells **C7:C11**. Input the following variables accurately for your organization like the image shown below.

After that, in cell **C12**, use **the SUM function** to sum all the variable costs. For that, write down the following formula into the cell and press **Enter**.

`=SUM(C7:C11)`

### 1. Calculate Contribution Margin per Unit

In this example, we will calculate the **Contribution Margin** per unit. The steps to calculate the value are given as follows:

**📌 Steps:**

- First, we will determine the variable cost required for unit production.
- Now, entitled the cell
**B14**as**Total Variable Cost per Unit**.

- Then, in cell
**C14**, write down the following formula:

`=C12/C5`

- Press
**Enter**.

- You will get the amount of total variable cost required for the production of a single unit.
- After that, to calculate the
**Contribution Margin**, titled cell**B15**as**Contribution Margin per Unit**.

- Now, write down the following formula into cell
**C15**.

`=C7-C14`

- Press
**Enter**.

- Finally, you will get the value of the
**Contribution Margin**for a single product.

Thus, we can say that our method worked perfectly, and we are able to calculate the **Contribution Margin** in Excel.

**Read More: ****How to Calculate Sales Margin in Excel (with Quick Steps)**

### 2. Estimate Contribution Margin for Entire Batch

In the following example, we are going to calculate the **Contribution Margin** for an entire batch of products. The steps to calculate the value are given below:

**📌 Steps:**

- At first, we will estimate total sales and for that entitled the cell
**B14**as**Total Sales**.

- Now, in cell
**C14**, write down the following formula:

`=C5*C7`

- Press
**Enter**.

- You will get the value of total sales.
- Then, to calculate the
**Contribution Margin**, titled cell**B15**as**Total Contribution Margin**and write down the following formula into cell**C15**.

`=C14-C12`

- Press
**Enter**.

At last, you will get the value of the **Contribution Margin** for an entire batch of products.

**Alternative Way to Calculate Total Contribution Margin**

You can also evaluate the **Total Contribution Margin** from the multiplication of the **Contribution Margin** of unit product and the number of total products. The steps of this process are:

**📌 Steps:**

- First of all, we will calculate the
**Total Variable Cost per Unit**, and for that, write down the following formula into cell**C14**,

`=C12/C5`

- Press
**Enter**.

- After that, to calculate the
**Contribution Margin per Unit**, write down the following formula into cell**C15**.

`=C7-C14`

- Again, press
**Enter**.

- At last, to determine the value of
**Total Contribution Margin**, write down the following formula into cell**C16**.

`=C5*C15`

- Finally, press
**Enter**.

- You will get the value of the
**Total Contribution Margin**for an entire batch of products and you may notice that the value of the**Total Contribution Margin**in both methods matched with each other.

Finally, we can say that both approaches worked successfully, and we are able to calculate the **Contribution Margin** in Excel.

**Read More: ****Excel Formula to Add Margin to Cost (4 Suitable Examples)**

## How to Calculate Contribution Margin Ratio

**📖 What Is Contribution Margin Ratio?**

The **Contribution Margin Ratio** represents the value of the **Contribution Margin** in terms of the percentage of the product price. This value is the ratio of the difference between **total sales** and **total variable costs** and the value of **total sales**. The mathematical expression of the **Contribution Margin Ratio** is:

The steps to calculate the **Contribution Margin Ratio** are given below:

**📌 Steps:**

- At first, we will calculate the value of
**Total Sales**. For that, write down the following formula into cell**C14**.

`=C5*C7`

- Press
**Enter**.

- Now, to calculate the
**Contribution Margin Ratio**, write down the following formula into cell**C15**.

`=(C14-C12)/C14`

- Again, press
**Enter**.

- Set the cell format as
**Percentage**from the**Number**group, locates in the**Home**tab.

- You will get the value of the
**Contribution Margin****Ratio**.

Finally, we can say that process worked perfectly, and we are able to calculate the **Contribution Margin Ratio** in Excel.

**Read More: ****How to Calculate Margin Percentage in Excel (5 Easy Ways)**

## Conclusion

That’s the end of this article. I hope that this article will be helpful for you and you will be able to calculate the **Contribution Margin** in Excel. Please share any further queries or recommendations with us in the comments section below if you have any further questions or recommendations.

Don’t forget to check our website **ExcelDemy** for several Excel-related problems and solutions. Keep learning new methods and keep growing!