contribution margin

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Contribution margin

The difference between variable revenue and variable cost.

Contribution Margin

The profit a company makes on a product calculated by subtracting its variable revenues from its variable costs. Because variable revenues and costs are largely dependent on the business cycle, a company with a high contribution margin is likely to have an even higher margin during economic expansion.

contribution margin

The price at which a firm sells its product less the variable cost of producing the product. A company with a large contribution margin is likely to experience substantial profit increases during an economic upswing.
References in periodicals archive ?
Weighted Contribution Contribution Margin Patient Mix Margin Medicaid $43.
We performed two-way sensitivity analysis on the joint effects of length-of-stay reduction and payer mix on incremental contribution margin excluding throughput effects.
Break-even point in units is equal to the fixed costs divided by the unit contribution margin and in dollars to the fixed costs divided by the contribution margin ratio.
Had that COO considered a contribution margin approach to unit costs when comparing the make-vs-buy option, the company would still be fabricating all of its parts.
According to ICRA estimates, with the new ethanol prices, the total contribution margin is likely to increase by around Rs.
The contribution margin is the proportion of the selling price that contributes to fixed costs.
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.
In the first article (July 2011), we created a Pro Forma Contribution Margin Income Statement and then used it to calculate the breakeven point and margin of safety for our example business, Bob's Bicycles.

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