Contribution Margin Chapters
00:00 Introduction to Contribution Margin
01:00 What is Contribution Margin?
03:17 Contribution Margin Formula
04:27 Contribution Margin Examples
In this video, we will explain Contribution Margin, how it is calculated, and its
uses.
What is Contribution Margin?
Contribution Margin helps us understand the company's in-depth cost
structure and determine the required sales volume to cover the cost and break
even.
Formula of Contribution Margin = Net Sales - Total Variable Expenses
Uses of Contribution Margin:
1. It can also be expressed as Fixed Cost - Net Income
2. Vital for calculating the break-even point
3. Examines variable production costs
4. Useful to decide which products of the business are profitable and which
aren’t
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