Marginal Costing Calculator

Work out marginal costing instantly with clear inputs, formula shown and shareable results.

About Marginal Costing Calculator

Marginal costing treats only variable cost as a product cost and charges fixed cost to the period. Contribution per unit is therefore the decision-relevant figure for pricing, product mix and accept-or-reject questions, while profit is total contribution less fixed cost.

Formulas

Contribution

Contribution per unit = Selling price - Variable cost

Profit

Profit = (Contribution per unit x Volume) - Fixed costs

Break-even

Break-even units = Fixed costs / Contribution per unit

Worked example

With the default values below, Marginal Costing Calculator returns Contribution per unit of $27.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Selling price per unit: 68
Variable cost per unit: 41
Volume (units): 7,500
Fixed costs for the period: 150,000

Results

Contribution per unit: $27.00
Total contribution: $202,500.00
Operating profit: $52,500.00
Break-even volume: 5,556

Step by step

1Values used
2Contribution
3Profit
4Break-even
5Contribution per unit= 27.00
6Total contribution= 202,500.00
7Operating profit= 52,500.00
8Break-even volume= 5,556

Assumptions and limits

The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation or tax into account.
Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

When should I accept a price below full cost?

When it still exceeds variable cost, the capacity is genuinely spare, and it will not undermine your existing price list.

Why does marginal costing report different profit from absorption costing?

Because absorption costing carries fixed overhead inside inventory. When stock levels change, the two methods report different profit for the same trading.