19. Analyzing Contributions and Margins

Management accounting is concerned with the internal operations of businesses and with the drivers of business performance. Its basic tools include contribution analysis and break-even analysis, which use financial indicators such as these:

Contribution margin—Usually defined as the sales revenue minus the variable costs of production

Unit contribution—The margin contributed by each unit sold

Break-even point—The point in the sales process at which the revenues equal the costs of production

These indicators ...

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