The following table sets forth a reconciliation of income before income taxes, the most directly comparable GAAP financial measure, to segment contribution margin
Based on a selling price of [euro] 3,150 for Copy I and [euro] 9,000 for Copy II, the contribution margin
analysis shows at first impression that Copy I is a profitable product, while Copy II is not.
Having recognized that few costs are, in fact, variable in relation to the volume of revenue, contribution margin
reporting was seen by the group as an effective way to determine profitability at three levels.
In the world of commerce, contribution margin
is a common tool used to estimate the performance of multiple products or services.
Table 4 presents multivariate regression parameters for the contribution margin
earned from each patient by the hospital in which he or she is treated.
The year-over-year increase in segment contribution margin
was attributable to the inclusion of Lion Oil in the Company's consolidated statement of operations, higher refining system throughputs, improved Gulf Coast refined product margins, access to cost-advantaged domestic crude sources and strong sales of refined products.
Since we created that Contribution Margin
Income Statement based on our original Master Budget, essentially it's a Static Budget.
The relevant comparison to make in deciding which crop to produce on each farm is to compare the contribution margin
of a product with the opportunity cost.
In addition, an improvement in profitability resulting from higher contribution margin
also increases internally generated funds and the financial latitude to modify the debt structure of the organization.
The differentiation takes place at the cost center level (53%), for product costing (44%), and for contribution margin
These items can dramatically increase variable costs and drive down contribution margin
per OR hour.
Suppose management believes that the contribution margin
per ton of product will lie between $40 and $50 per ton, with all values on this interval and its end points equally likely.