Thursday, March 13, 2008

What is Contribution Margin

Contribution Margin

Understanding Contribution Margin (CM) is an essential part of variable costing and managerial accounting.

CM = Selling Price - Variable Costs

It is calculated as either CM per unit or total CM.

CM is the profit available to cover fixed costs during the manufacturing process and provide net income to shareholders

Additional Examples:
Finding Contribution Margin (CM)

Difference Fixed Cost Variable Cost

Variable Cost Ratio Example

Calculate Total Overhead Budget

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