# Metrics 4

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School
Ryerson University
Department
Marketing
Course
MKT 100 Worksheet: Metric 4 Contribution Margin
1)Mohan, an artist, draws caricatures on the waterfront pier. It costs
him approximately \$5 in materials (paper and markers) for each
caricature he makes. He sells each caricature for \$20. Calculate the
contribution margin in terms of dollars and percent.
Contribution Margin (\$) = Revenue COGS
= \$20 - \$5
= \$15
Contribution Margin (%) = [Contribution per Unit (\$) /
Sale Price per Unit (\$)] * 100%
= [(Sale Price per Unit Variable Cost per
Unit) / Sale Price per Unit] *100%
= [(\$20 - \$5) / \$20] * 100%
= [\$15 / \$20] * 100%
= 0.75 * 100%
= 75%
2)The Hotel Grill Bar sells a set lunch for \$12. The food cost of sales used
in producing each set lunch is \$5. Additional variable costs are \$3 per
lunch. The fixed costs of the restaurant are \$3 per meal. What is the
contribution margin expressed in dollars and percent?
Variable Expenses = \$5 + \$3
= \$8
Contribution Margin (\$) = Revenue Variable Expense
= \$12 - \$8
= \$4
Contribution Margin (%) = [Contribution per Unit (\$) /
Sale Price per Unit (\$)] * 100%
= [(Sale Price per Unit Variable Cost per
Unit) / Sale Price per Unit] * 100%
= [(\$12 - \$8) / \$12] * 100%
= \$4 / \$12 * 100%
= 0.33 * 100%
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