Prasant Kumar Mallick

• Mar 22nd, 2012

 

Contribution is nothing but your fixed expenses (Business),the total Equation is--your total expenses will be divided into two category.
1) FC (Fixed Cost)

2) VC Variable cost,

Fixed Cost-:fixed cost are those expenses Which is Req for Running the Business irrespective of your Sales Increase or Decrease like-Factory Rent. Factory Lighting & others.

Variable Cost-:Variable Cost are those which will vary as per your production Increase or Decrease Like -Material Consumption

Equation-

Sales------ ********
Less-VC Variable Cost-*********
----------------
Contribution- *******
Less-FC Fixed Cost- ******
--------------------
Profit or Loss- *******

tomk11

 Profile Answers by tomk11 

• Apr 28th, 2012

 

Contribution margin is the difference between the selling price and variable cost per unit or in total for the level of activity. Contribution margin is the amount of each revenue dollar remaining to pay fixed costs and provide a profit after variable costs are covered.