Contribution margin accounting

What is meant by Contribution margin accounting?

Contribution margin calculation is a cost accounting method that determines the difference between revenue and variable costs. It shows how much each sold product contributes to covering fixed costs and what amount is available for profit generation.

Typical software functions in the area of "contribution margin calculation":

• Cost Breakdown: Automatic separation of variable and fixed costs.
• Contribution Margin Calculation: Determination of contribution margin per product and total contribution margin.
• Break-Even Analysis: Calculation of the point where costs and revenues are equal.
• Multi-level Contribution Margin Calculation: Consideration of different fixed cost levels.
• Scenario Analysis: Simulation of various price and cost scenarios.
• Visualization: Graphical representation of contribution margins and profit zones.

Examples of "contribution margin calculation":

• Unit Contribution Margin: Calculation of the contribution margin for a single product.
• Total Contribution Margin: Determination of the contribution margin for all sold products.
• Contribution Margin Ratio: Percentage of the contribution margin in relation to revenue.
• Single-level Contribution Margin Calculation: Consideration of all fixed costs as a single block.
• Multi-level Contribution Margin Calculation: Breakdown of fixed costs according to the originator principle.
• Break-Even Point: Determination of the sales volume at which profits are generated.