Enter the price per unit ($), the cost per unit ($), and the number of units into the calculator to determine the Incremental Profit.
Incremental Profit Formula
The following formula is used to calculate the Incremental Profit.
IP = (PPU - CPU) * U
- Where IP is the Incremental Profit ($)
- PPU is the price per unit ($)
- CPU is the cost per unit ($)
- U is the number of units
To calculate incremental profit, subtract the cost per unit from the price per unit, then multiply by the number of units.
How to Calculate Incremental Profit?
The following example problems outline how to calculate Incremental Profit.
Example Problem #1
- First, determine the price per unit ($). In this example, the price per unit ($) is given as 600 .
- Next, determine the cost per unit ($). For this problem, the cost per unit ($) is given as 300 .
- Next, determine the number of units. In this case, the number of units is found to be 20.
- Finally, calculate the Incremental Profit using the formula above:
IP = (PPU – CPU) * U
Inserting the values from above yields:
IP = (600 – 300) * 20 = 6000 ($)
Example Problem #2
The variables needed for this problem are provided below:
price per unit ($) = 150
cost per unit ($) = 40
number of units = 15
Entering these values and solving gives:
IP = (150-40) * 15 =1650 ($)