Where a business only allocates direct or variable costs to specific goods or services and uses the total variable or direct costs as a basis for setting selling price per unit. Indirect costs are only included when preparing the whole firm’s profit and loss account. Example 1: If the selling price of a bar of chocolate is £1.00 and the variable costs to produce it (eg ingredients of cocoa, butter and milk, etc) are £0.22, then contribution per unit is £0.78 (£1.00-£0.22). Example 2: If a road haulage business charges its customers £0.86 per km travelled and variable costs per vehicle (eg fuel, wear and tear on tyres, etc) amount to £0.44 per kilometre, then contribution per kilometre would be £0.42 (£0.86 – £0.44).