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CONTRIBUTION: It is the variation between the marginal cost of sales and sales and it contributes towards fixed profit and expenses. It is differ from the profit which is the net gain in activity or the extra and remains after deducting fixed expenses from the entire contribution. In marginal costing, the idea of contribution is very essential as it helps to observe the profitability of a product, department or division, to have a better product mix, for maximize the profits and profit planning to of a concern.
Contribution = Sales - Variable cost (or) Fixed cost +Profit (or) Fixed cost - Loss
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Question The statements of comprehensive income for three entities for the year ended 30 September 2009 are presented below: SOT PB UV
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