Say Pemulis Basketballs now wants to use this formula. It can simply plug in the numbers — 60 units sold for $15 each, variable cost of $6 per unit, fixed costs of $300 — and solve. First compute the contribution margin per unit:
Contribution margin per unit = Sales price per unit – Variable costs per unit = $15 – $6 = $9
Next, plug contribution margin per unit into the net income formula to figure out net income:
Net income = (Sales volume x Contribution margin per unit) –Fixed costs = (60 x $9) – $300 = $240