Contribution margin: related pages

sales price - variable cost per unit.

The break-even point is the level of sales (revenues or volumes) needed to cover the fixed costs; the level of sales at which neither a profit or loss is made.

Gross profit

Sales minus the cost of goods sold. A very simple but useful profit measure.

Variable costs

On the other hand variable costs change with sales. Examples of variable costs are raw materials, shipping and depletion.

Fixed costs

Costs that do not change with the level of sales.