Contribution Margin Approach to Cost-Volume-Profit Analysis

This chart enables you to visualize the components of costs and revenue from a Contribution Margin point of view. In this view, the difference between the selling price and the variable cost of each successive unit sold is allocated to the payment of fixed costs until these costs are fully paid. Thereafter, the difference from each unit contributes to the profit.
 

American River Bank
3100 Zinfandel Drive Suite 450
Rancho Cordova, CA

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