Contribution

Definitions (2)
1. Payment to an annuity or retirement plan. 2. Mortgage: A term that can have several meanings in the context of insurance. A contribution can be the portion of a loss paid by each insurer, when the same loss is covered by two or more insurers. Or the term can mean the portion of a premium paid by the insured. The term can also mean the portion of the loss paid by the insurer under coinsurance.

What is the formula of contribution margin ratio?

Answers (2)
The contribution margin ratio = [(Sales - Variable Costs) / (Sales) ] x 100 which provides a percentage of sales that can go to fixed costs and profit. For example, lets say you have Sales of $100 with Variable Costs of $50. The contribution margin ratio would be ($100 - $50)/($100) which equals 50% and indicates that each unit of sales contributes 50% to other costs. Contribution Margin Ratio can also be calculated from Profit, Fixed Costs and Sales with the following relationship: Profit = (Sales x CM) - Fixed Costs Therefore if given Profit, Sales, and Fixed Costs, then solve algebraically for CM. I hope this helps. Paul Contribution Margin and Contribution Margin Ratio definition contribution margin formula Formulas to calculate contribution margin and contribution margin ratio: Contribution Margin = sales - variable costs. Contribution Margin Ratio = (sales - variable costs)/sales.

Contribution margin and contribution margin ratio definition and explanation: Contribution margin is the amount generated by sales to cover fixed costs. The contribution margin ratio indicates the percent of sales available to cover fixed costs and profits.
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