Firstly determine the Contribution margin in total. Say for instance the company has sold 100 items, worth $ 5 each. Multiplying the two values will give you the dollar amount, which in this case will be – ($ 5 x 100) = 500. Now you will need to determine the total variable expenses. For simplicity, let assume that the company pays $2 per 100 items in Direct Labour and $ 1 per 100 items in Direct Material cost.
Adding the two expenses after multiplying will give us the variable count. ($2x100)+ ($1x100) = 300
Subtract this amount from the total sales to calculate total contribution margin: $500-300=$200
Now determine the per unit contribution margin. Knowing the unit price will make the task easier for you. In this example if the company produces 100 items, then divide the total variable amount with the number of items produced to compute the unit variable cost, which in this case is $ 3 (300/100).
Simply subtract this per unit cost with the sales per unit, which in this example is $ 5. Your per unit contribution margin will be $2. Multiply this with the number of items will again give us total contribution margin $2x100=$200