Skip to Main Content
Accounting All-in-One For Dummies, with Online Practice, 2nd Edition
book

Accounting All-in-One For Dummies, with Online Practice, 2nd Edition

by Joseph Kraynak
April 2018
Beginner content levelBeginner
768 pages
20h 9m
English
For Dummies
Content preview from Accounting All-in-One For Dummies, with Online Practice, 2nd Edition

Chapter 3

Examining Contribution Margin

IN THIS CHAPTER

check Figuring contribution margin

check Meeting income goals with cost-volume-profit analysis

check Analyzing your break-even point, target profit, and margin of safety

check Exploring operating leverage

When you have to make a business decision about what to sell, how much of it to sell, or how much to charge, you first need to understand how your decision is likely to affect net income — your profit. Suppose you sell one refrigerator for $999.95. How does that sale affect your net income? Now suppose you sell 1,000 of the same make and model at this price. How does that sales volume affect net income?

Contribution margin simplifies these decisions. In this chapter, you find out how to calculate contribution margin and how to apply it to different business decisions, using both graphs and formulas. You also find out how to prepare something called a cost-volume-profit analysis, which explains how the number of products sold affects profits. And you discover how to prepare a break-even analysis, which indicates exactly how many products you must sell ...

Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.
Start your free trial

You might also like

Accounting All-in-One For Dummies

Accounting All-in-One For Dummies

Ken Boyd, Lita Epstein, Mark P. Holtzman, Frimette Kass-shraibman, Maire Loughran, Vijay S. Sampath, John A. Tracy, Tage C. Tracy, Jill Gilbert Welytok

Publisher Resources

ISBN: 9781119453895Purchase book