The Concept of Contribution and its Significance


1

The Concept of Contribution and its Significance

 

Contribution is the difference net sales and marginal costs, and it is used to recover fixed costs first. Any excess over fixed costs would be profits. When a business manufacturers more than one product, the computation of profits realized on individual products may be difficult due to the problem of apportionment of fixed costs to different products., the rationale of contribution lies in the fact that fixed costs are done away with under marginal costing. The concept of contribution helps to determine the breakeven points, profitability of products, departments, etc., to select product-mix for profit maximization, and to fix selling prices under different circumstances such as trade depression, expert sales prices discrimination etc. contribution is the definite test to ascertain whether a product or process is worthwhile to continue among different products or processes.


Like it? Share with your friends!

1
BMS Team

We, at BMS.co.in, believe in sharing knowledge and giving quality information to our BMS students. We are here to provide and update you with every details required by you BMSites! If you want to join us, please mail to [email protected].

64 Comments


Warning: Undefined array key "html5" in /home/bmsnewco/public_html/wp-content/plugins/facebook-comments-plugin/class-frontend.php on line 140

Facebook comments:

This Website Is For Sale. Email us an offer we cannot refuse on [email protected] :)

X
Choose A Format
Personality quiz
Series of questions that intends to reveal something about the personality
Trivia quiz
Series of questions with right and wrong answers that intends to check knowledge
Poll
Voting to make decisions or determine opinions
Story
Formatted Text with Embeds and Visuals
List
The Classic Internet Listicles
Countdown
The Classic Internet Countdowns
Open List
Submit your own item and vote up for the best submission
Ranked List
Upvote or downvote to decide the best list item
Meme
Upload your own images to make custom memes
Video
Youtube and Vimeo Embeds
Audio
Soundcloud or Mixcloud Embeds
Image
Photo or GIF
Gif
GIF format