Dear Tutors, I couldn’t find exact answer to this question, I hope you can help me to clarify: When calculating contribution per unit (and using e.g. at break-even analysis), should we deduct variable other costs as well? I mean besides variable production cost, should we remove other (selling, distribution) variable costs from the selling price?
Hi – yes all variable costs should be deducted when calculating contribution per unit – this includes all variable production costs as well as all variable selling/ distribution expenses too.