Final answer:
Contribution margin is a financial measure that indicates the amount of revenue that is left after deducting variable costs from sales revenue. Some trigger words/sentences for contribution margin in a case include contribution margin ratio, break-even point, and contribution margin per unit.
Step-by-step explanation:
Contribution margin is a financial measure that indicates the amount of revenue that is left after deducting variable costs from sales revenue. It represents the portion of each sales dollar that contributes towards covering a company's fixed costs and generating profit. Here are some trigger words/sentences for contribution margin in a case:
- Contribution margin ratio: This ratio is calculated by dividing the contribution margin by the sales revenue and it shows the percentage of each sales dollar that contributes to covering fixed costs and generating profit.
- Break-even point: This is the level of sales at which a company's total revenue equals its total costs, resulting in zero profit. It can be calculated by dividing the company's fixed costs by the contribution margin ratio.
- Contribution margin per unit: This is calculated by subtracting the variable costs per unit from the selling price per unit and represents the amount of each unit sale that contributes towards covering fixed costs and generating profit.