Respuesta :
Effect of Contribution Margin on the other costs is given below
Explanation:
1.Contribution margin per unit is the net amount that each additional unit sold contributes towards a company's fixed costs and profit. It equals the difference between the product's sales price and variable cost per unit.It represents the incremental money generated for each product/unit sold after deducting the variable portion of the firm's costs.Also known as dollar contribution per unit, the measure indicates how a particular product contributes to the overall profit of the company. It provides one way to show the profit potential of a particular product offered by a company and shows the portion of sales that helps to cover the company's fixed costs. Any remaining revenue left after covering fixed costs is the profit generated.
2.The Formula for Contribution Margin Is
The contribution margin is computed as the difference between the sale price of a product and the variable costs associated with its production and sales process.
Contribution Margin=Sales Revenue - Variable Costs
3.The contribution margin is the foundation for break-even analysis used in the overall cost and sales price planning for products. The contribution margin helps to separate out the fixed cost and profit components coming from product sales and can be used to determine the selling price range of a product, the profit levels that can be expected from the sales, and structure sales commissions paid to sales team members, distributors or commission agents.
4,The contribution margin represents the portion of a product's sales revenue that isn't used up by variable costs, and so contributes to covering the company's fixed costs.
The concept of contribution margin is one of the fundamental keys in break-even analysis.
Low contribution margins are present in labor-intensive companies with few fixed expenses, while capital-intensive, industrial companies have higher fixed costs and thus, higher contribution margins
The contribution margin per unit and also the unit sold contribute toward a company's fixed costs and profit. it's higher contribution margins
What is Margin Per Unit?
1. When the Contribution margin per unit is the net amount that every extra unit sold contributes towards a company's fixed costs and profit. It equals the excellence between the product's sales price and when the variable cost per unit. It designates the incremental money developed for every product/unit sold at that time deducting the variable portion of the firm's costs. Also, we all know that the dollar contribution per unit, measure indicates how a specific product contributes to the profit of the corporate. It provides a way to indicate the profit potential of a specific product offered by a corporation and shows the portion of sales that helps to hide the company's fixed costs. Any remaining revenue exited after surrounding fixed costs is the profit generated.
2. The Formula for Contribution Margin Is
When The contribution margin is computed because of the difference between the sale price of a product and therefore the variable costs related to its production and also sales process.
Then, Contribution Margin=Sales Revenue - Variable Costs
3. When The contribution margin is the basis for break-even estimation employed in the general cost and sales price planning for products. The contribution margin helps to separate the fixed charge and profit components coming from product sales so they will be accustomed demarcate the price range of a product, the profit levels which will be expected from the sales, and construction sales commissions paid to the sales team members, distributors or commission agents.
4. When The contribution margin symbolizes the portion of a product's sales revenue that may not be dried up by variable costs, so contributes to covering the company's fixed costs. The notion of contribution margin is one of the rudimentary keys in break-even analysis. Low contribution margins are attending in labor-intensive companies with few fixed expenses, while capital-intensive, industrial establishments have higher fixed costs and therefore, higher contribution margins
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