Contribution margin意思

Contribution margin is a term used in cost accounting to describe the amount of revenue that remains after deducting the variable costs associated with producing a product or delivering a service. It is essentially the portion of each sale that is available to cover fixed costs and contribute to profit.

The contribution margin is calculated by subtracting the variable costs from the total revenue. Variable costs are those that vary directly with the production or delivery of a product or service, such as the cost of raw materials, direct labor, and variable overhead. Fixed costs, on the other hand, remain constant regardless of the level of production or sales, such as rent, insurance, and fixed salaries.

The contribution margin is often expressed as a percentage of the sales revenue, which is known as the contribution margin ratio. This ratio is calculated by dividing the contribution margin by the total revenue and then multiplying by 100.

The contribution margin and contribution margin ratio are important tools for managers because they help to determine the break-even point of a business, which is the level of sales at which total revenues equal total costs. By understanding the contribution margin, managers can make informed decisions about pricing, production levels, and cost control.