Molloy will also need to calculate another important financial element which represents the difference between the unit price and the variable cost. This ratio is called contribution margin. According to Chapter 16, contribution margin “is the difference between the selling price per unit and the variable cost per unit” (Anthony, Hawkins, Merchant). In the case of MEHS, the unit contribution is as follows: - Contribution margin = Price/physical – variable cost/physical = $160 – ($32,000/500 physical) o Contribution margin = 160 – 64 = 96 $ With this information, Dr. Molloy can now determine the volume of physical exams MEHS needs to perform to start making a profit. Still from Chapter 16, the formula to calculate the break-even volume is as follows: Break-even volume (units) = Fixed costs/unit