Interpret Cost Behavior and Contribution Margin With an Online MBA
In other words, fixed costs are not dependent on your business’s productivity. Furthermore, an increase in the contribution margin increases the amount of profit as well. To cover the company's fixed cost, this portion of the revenue is available. After all fixed costs have been covered, this provides an operating profit. The contribution margin shows how much additional revenue is generated by making each additional unit of a product after the company has reached the breakeven point. In other words, it measures how much money each additional sale "contributes" to the company's total profits. How Business Leaders Interpret Cost Behavior and...
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