marin company makes several products, including canoes. the company reports a loss from its canoe segment (see below). all its variable costs are avoidable, and $307,500 of its fixed costs are avoidable. segment income (loss) sales $ 1,009,400 variable costs 721,000 contribution margin 288,400 fixed costs 349,000 income (loss) $ (60,600) (a) compute the income increase or decrease from eliminating this segment. (b) should the segment be continued or eliminated?

Contribution margin is the profit that remains after variable costs are deducted from revenue, while gross margin is the profit that remains after the cost of goods sold is deducted from revenue.

What is margin for contributions?

According to Knight, "Contribution margin shows you the aggregate amount of revenue available to cover fixed expenses and provide profit to the company after variable costs."This could be thought of as the portion of sales that helps pay for fixed costs.

How is Contribution Margin Calculated?

The contribution margin is determined by dividing variable costs by revenue. The formula for determining the contribution margin ratio is Revenue / (Revenue - Variable Costs).

Sales 1009400 0 -1009400 less Variable Costs 721000 0 721000 less Contribution Margin 288400 0 -288400 less Fixed Costs 349000 307500 41500 less Net Income (Loss) -60600 -307500 -246900.

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