Contribution Margin Formula Is used to measure the efficiency of the company to produce products and maintain a low level of variable cost. This is the calculation which is change by the change in the difference of fixed and variable cost.
Contribution Margin Formula calculated by the difference of variable cost and net sales revenue.
Contribution Margin Formula = Net sales – Variable Cost
Net sales are the total revenue which the company expect to receive from its total sales. Variable Cost is the expenses which increase with increasing of the revenue or operations. Here you can also learn about the definition of Contribution Margin.
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