Enter the total sales revenue ($) and the total direct costs ($) into the Cost Margin Calculator. The calculator will evaluate and display the Cost Margin.
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Cost Margin Formula
The following formula is used to calculate the Cost Margin.
CM = (SR – DC) / SR *100
- Where CM is the Cost Margin (%)
- SR is the total sales revenue ($)
- DC is the total direct costs ($)
How to Calculate Cost Margin?
The following example problems outline how to calculate Cost Margin.
Example Problem #1:
- First, determine the total sales revenue ($).
- The total sales revenue ($) is given as: 550.
- Next, determine the total direct costs ($).
- The total direct costs ($) is provided as: 380.
- Finally, calculate the Cost Margin using the equation above:
CM = (SR – DC) / SR *100
The values given above are inserted into the equation below and the solution is calculated:
CM = (500 – 380) / 380 *100 = 31.578 (%)
Example Problem #2:
For this problem, the variables required are provided below:
total sales revenue ($) = 640
total direct costs ($) = 134
Test your knowledge using the equation and check your answer with the calculator above.
CM = (SR – DC) / SR *100 = ?
