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What is contribution margin and how is it calculated

30/04/2021 Client: muhammad11 Deadline: 2 Day

Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes that means it covers both the FIXED costs and Profit or Loss. This is calculated under variable costing method and it is calculated as follows.

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