Increase in Contribution Margin Calculator

Calculate Increase in Contribution Margin







Formula

The formula to calculate the Increase in Contribution Margin is:

\[ \Delta CM = (CM_{new} \cdot Q_{new}) - (CM_{old} \cdot Q_{old}) \]

Where:

What is an Increase in Contribution Margin?

An increase in contribution margin refers to the additional profit generated from selling additional units of a product or service. It is calculated by comparing the contribution margins of the new and old quantities sold. The contribution margin is the difference between the selling price per unit and the variable cost per unit. An increase in contribution margin indicates improved profitability and efficiency in generating revenue from sales.

Example Calculation

Let's assume the following values:

Using the formula:

\[ \Delta CM = (15 \cdot 200) - (10 \cdot 150) = 3000 - 1500 = 1500 \]

The Increase in Contribution Margin (ΔCM) is $1500.