le expenses, and contribution margin can also be expressed on a per unit basis. If Racing sells an additional bicycle, $200 additional CM will be generated to cover fixed expenses and profit.РРРThe Contribution ApproachРEach month, Racing must generate at least $80,000 in total CM to break even.РРРThe Contribution ApproachРIf Racing sells 400 units in a month, it will be operating at the break-even point.РРThe Contribution ApproachРIf Racing sells one more bike (401 bikes), net ?operating income will increase by $200.РРРThe Contribution ApproachРWe do not need to prepare an income statement to estimate profits at a particular sales volume. Simply multiply the number of units sold above break-even by the contribution margin per unit.РIf Racing sells 430 bikes, its net income will be $6,000.
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