A profitability metric that measures the revenue remaining after variable costs are subtracted, representing the amount each unit sold contributes to covering fixed costs and generating profit. It's calculated as (Revenue - Variable Costs) / Revenue.
'Contribution' from Latin 'contribuere' meaning to bring together, 'margin' from Latin 'margo.' The concept emerged in 1930s cost accounting as manufacturers needed better tools to understand how individual products contributed to overall profitability and fixed cost coverage.
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