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Explain the concept of a contribution margin and describe how its different from gross margin. what...

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Accounting

  1. Explain the concept of a contribution margin and describe howits different from gross margin. what is the significance of thecontribution margin ratio, and how is the ratio used when planningbusiness operations? Give examples!

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What Is the Contribution Margin The contribution margin can be stated on a gross or perunit basis It represents the incremental money generated for each productunit sold after deducting the variable portion of the firms costs The contribution margin is computed as the selling price per unit minus the variable cost per unit Also known as dollar contribution per unit the measure indicates how a particular product contributes to the overall profit of the company It provides    See Answer
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