A Level · Cambridge (CIE) · 9609

Contribution and decisions

Use contribution to analyse costs while recognising what the calculation leaves out.

What you will learn

Calculate unit and total contribution.
Distinguish contribution from profit.

Contribution covers fixed costs

Contribution per unit is selling price minus variable cost per unit. Total contribution is this amount multiplied by units sold. Subtract fixed costs to calculate profit in the simple model.

A high contribution per unit does not alone identify the best product if sales volumes, scarce resources or strategic effects differ.

Context changes the decision

For a special order, positive additional contribution can matter when spare capacity exists and fixed costs do not change. However, the decision must also consider displaced regular sales, extra costs, customer reactions and longer-term pricing effects.

Use the figures to support a reasoned decision, not to replace evaluation. State which costs are relevant to the particular choice.

Total contribution = (price−unit variable cost) × units sold

Put the idea to work

Worked example

A product sells for $30, variable cost is $18, sales are 500 units and fixed costs are $4000. Find total contribution and profit.

Show the worked solution

Unit contribution is 30−18=$12.
Total contribution is 12×500=$6000.
Subtract fixed costs: 6000−4000.

Answer Contribution $6000; profit $2000

Common mistakes

Contribution is before fixed costs, not after them.
Positive unit contribution does not guarantee overall profit.

Recall without your notes

What can you explain now?

Price is $24 and variable cost is $15. Find contribution per unit.

Compare with the explanation

Subtract the variable cost from selling price: 24−15.

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Keep learning Business

Official syllabus 2026–2028 Official syllabus 2029

Course scope and assessment

One hundred and eighteen original lessons map every numbered section in all ten topics of Cambridge International AS & A Level Business 9609 (2026–2028 Version 2 and 2029 Version 1; Cambridge states the 2029 syllabus has no significant changes affecting teaching). Topic 1, Business and its environment, has 12 lessons; Topic 2, Human resource management, 12; Topic 3, Marketing, 17; Topic 4, Operations management, eight; Topic 5, Finance and accounting, 13; A Level Topic 6, Business and its environment, ten lessons across nine sections; Topic 7, Human resource management, 15; Topic 8, Marketing, six; Topic 9, Operations management, ten lessons across nine sections; and Topic 10, Finance and accounting, 15. Two lessons split broad strategic-framework and lean-production sections into smaller steps. Across the 116 official numbered sections, each lesson includes a guided example, readiness and checkpoint feedback, and guided, independent and transfer practice with worked steps and explained answers. The course map now links all 34 grouped syllabus areas. Three earlier starter lessons are retained but are not counted as mapped coverage. Cambridge does not expect candidates to draw up a full set of accounts; this pathway teaches interpretation, specified amendments and ratio use. Full Paper 1–4 timed practice, paper-specific grade evidence and human subject-teacher review remain outstanding. Written practice is self-checked, not an official Cambridge grade.