The contribution per unit for hummus-to-go is calculated by subtracting the variable cost per unit from the selling price per unit of the hummus. This figure indicates how much money from each sale is available to cover fixed costs and contribute to profit.
The contribution per unit in a business context refers to the amount of money that each unit of a product contributes to covering the fixed costs of the business after deducting the variable costs associated with the product. To calculate the contribution per unit for hummus-to-go, you need to subtract the variable cost per unit from the selling price per unit of the hummus.
Example Calculation:
If the selling price of one unit of hummus-to-go is $5 and the variable cost per unit is $2, the contribution per unit would be:
Selling Price per Unit: $5
Variable Cost per Unit: $2
Contribution per Unit: $5 - $2 = $3
This means that for each hummus-to-go sold, $3 contributes to covering fixed costs and profit.