Question - Define Contribution Margin?
Answer -
In accounting contribution margin is defined as revenues minus variable expenses. In other words, the contribution margin reveals how much of a company's revenues will be contributing (after covering the variable expenses) to the company's fixed expenses and net income. The contribution margin can be presented as:
1) The total amount for the company.
2) The amount for each product line.
3) The amount for a single unit of product.
4) As a ratio or percentage of net sales.