Contribution margin Analysis
Contribution
Contribution is the difference between sales and variable cost or marginal cost of sales . if may also be defined as the excess of selling price over variable cost per unit , contribute is also known as contribution margin or gross margin contribution being the excess of sales over variable cost is thye amount that is contribution towards fixed expense and profit .
Contribution can be represented as :
Contribution = sales - variable (marginal) cost
or contribution (per unit) = selling price -variable (or marginal) cost per unit
or contribution = fixed costs +profit(-loss)