Project #7926 - Finance

Contribution margin (CM) is a useful means for evaluating whether a product or service offering adds to a company's ability to cover its fixed costs. Break-even analysis and target costing/sales goals may be calculated if management has a good understanding of fixed vs. variable costs.  If the firm hasn't correctly identified variable costs the analysis will be ineffective.

Please describe the formula for CM in your own words and explain its usefulness to management.  Please describe its relationship to target profit and break-even analysis.  Also, please describe the potential errors a manager could make in classifying costs as either variable or fixed.  Please cite at least 1 source.

 

 

Subject Business
Due By (Pacific Time) 06/21/2013 11:00 pm
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