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 ...