Accounting › Section Q · Cost-volume-profit analysis › Topic Q.1
Contribution margin
Every sale first pays for the costs it causes, and whatever is left over goes towards rent, salaries and profit. That leftover is the contribution margin, the single most useful number in cost-volume-profit analysis.
In this topic
- Why managers sort costs by behaviour
- Contribution margin per unit
- The contribution margin ratio
- Total contribution margin and the contribution format
- Worked example: Quillmoor's April and May
- Contribution format versus traditional format
- Worked example: recasting a traditional statement
- Comparing products and services
- Cost structure and the relevant range
- Common mistakes to avoid
- Key takeaways
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