ECONOMICS

Detailed explanation-1: -Total profit = contribution less fixed costs In the above example we calculated contribution per unit by subtracting variable cost per unit from selling price per unit.

Detailed explanation-2: -Thus, the selling price per unit formula to find the price per unit from the income statement, divide sales by the number of units or quantity sold to identify the price per unit. For example, given sales of $80, 000 for the year and 2, 000 units sold, the price per unit is Rs. 40 (80, 000 divided by 2, 000).

Detailed explanation-3: -In order to find the average variable cost (total variable cost per unit produced), you need to sum all the variable costs for a given period and divide by the total number of units made during that period. In other words, you need to divide the total variable cost by the total number of items made.