Explain term contribution - contribution margin analysis, Managerial Accounting

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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)

 


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