Contribution Margin

In short run, managers are concerned with the contribution margin or contribution profit since fixed costs are sunk costs. Break even charts can be used to measure the contribution of business activity towards covering fixed costs. Average contribution margin (ACM) is the difference between unit price and AVC (P - AVC). The break-even point is where ACM = AFC. Total contribution analysis can also be used to determine the total contribution profit. Contribution is the difference between the total revenue and variable costs. That is, it is the revenue on the sale of unit of output after variable costs have been covered.

Total contribution margin (TCM) = TR - TVC

                    or       TCM = Total net profit (TNP) - TFC

Thus at the break-even point

TCM = TFC and TNP = 0.

The equation also shows that            

TR=TCM + TVC

= (TNP + TFC) + TVC 

Managerial Economics Tutoring - Assignment Help

Our online managerial economics experts are here for your help. Expertsmind.com online assignment help-homework help brings you high grade in your courses and examination, We at Expertsmind.com offers managerial economics assignment help, managerial economics homework help and projects help. We offer complete package of managerial economics online tutoring for 24x7 hours.

ExpertsMind.com - Contribution Margin Assignment Help, Contribution Margin Homework Help, Contribution Margin Assignment Tutors, Contribution Margin Solutions, Contribution Margin Answers, Break Even Analysis Assignment Tutors