Contribution Margin: What is it? (Learn Fast)

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Contribution Margin is closely analyzed by managerial accountants.
This margin helps them determine how much of their budget can be allocated to Fixed Costs.
In today's video we will be discussing what contribution margin is, how it is calculated and apply it to an example.
Through my simple strategy of defining the "gap" in the equation, you will easily remember contribution margin.
Comment below if you have any questions, I'm happy to help!
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[@Accountinguniv]

Contribution Margin made easy! Please comment and tell me if this video helped you understand Contribution Margin.

[@LadyInBlack2344]

I am watching this video 5 years later and its still relevant and very clear.... there's no other simple way of explaining this, thank you and i subscribed just now...

[@cestlavie3920]

Thank you so much! I understood the basic concept of contribution margin. Could you please explain further the difference between variable cost and fixed cost? Thank you!

[@AhmadAshraf-qs7ud]

your explanation is very clear, thank you from Egypt :D

[@angie9zhou]

thanks the way you lecture. it is easier to understand why it called contribution Margin.

[@mia35767]

You are brilliant 🤩

[@jamieparker7655]

Wow... This makes so much more sense now. Thanks!

[@somto.uwakwe]

Thank you This really helped me 😊

[@lvteachme973]

Thank you!

[@mdasaduddin6127]

Please answer this What is the contribution margin if work 1 accounts for 70% of company sales with an average contribution margin of 9% and work 2 comprises the balance of company revenue average 6%?

[@sandipsengupta2152]

Well explained

[@norkorcambodiatrip2446]

Thank you

[@adhamcharani1379]

What is the best choice for the firm of these three products for sale, A or B or C? and why? If a firm has 3 different products A, B & C Contribution margin A = $231 B = $234 C= $255 Net Profit: A = 10.01% B = 8.32% C = 9.38% Gross Profit: A = 41% B = 38% C = 53% (fixed cost is the same for all products)

[@hibaqusous394]

I didn’t understand why you subtract 3

[@somto.uwakwe]

It's because this example is per unit. So we divided by $10 in order to get the contribution margin per unit.

[@LanNguyenthi-dg3sc]

CovidImages need to be invested more than half19