Contributioin Margin

What is contribution margin and how it is calculated?

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Jas Dhingra

  • Jul 20th, 2008

Contribution is the difference of Revenue over variable costs. Contribution Margin higher than fixed costs will result into profits. Any incerase in revenue will earn higher profits as fixed costs will remain same

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Contribution means Total Sales-Variable Cost= Contribution
Contribution is a combination of Fixed expenses + or - profit means
If Sales are 10000 and Variable cost is 7000 and Fixed cost is 3200 then contribution margin is -200

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