What are the Advantages of contributionmargin analysis

the concept of contribution is variable aid to management in making managerial decisions . a few benefits resulting from the contribution margin are given below :

1) It helps the management in the fixation of selling prices

2) It assists in determining the break -even points.

3) It helps management in the selection of a suitable product mix for profit maximization .

4) It helps in choosing from among alternative methods method which gives highest contribution per limiting factor is adopted

5) It helps the management in deciding whether to purchase or manufacture a product or a component

6) It helps in taking a decision as regards to adding a new product in the market .