BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
How is Contribution calculated?
|
|
Sales = Contribution
|
|
|
GOP-Sales = Contribution
|
|
|
Revenue-Direct Costs (Engagements) = Contribution
|
|
|
Direct Costs + Sales = Contribution
|
Explanation:
Detailed explanation-1: -How Do You Calculate Contribution Margin? Contribution margin is calculated as Revenue-Variable Costs. The contribution margin ratio is calculated as (Revenue-Variable Costs) / Revenue.
Detailed explanation-2: -Contribution margin equals total revenue minus variable costs. So, if you make $500 on a sale and spend $100 to make it happen, then your contribution margin is $400.
Detailed explanation-3: -Thus, the calculation of contribution per unit is: (Total revenues-Total variable costs) รท Total units = Contribution per unit. When only one product is being sold, the concept can also be used to estimate the number of units that must be sold so that a business as a whole can break even.
There is 1 question to complete.