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C

Contribution Margin

Definition

Sales revenue minus variable costs. It's the amount each unit contributes toward covering fixed costs and generating profit. Formula: Contribution Margin = Sales − Variable Costs.

Related Terms

Break-Even Point

The sales level where total revenue exactly equals total costs—meaning you're not making or losing money. Formula: Fixed Costs ÷ Contribution Margin per Unit. It's the minimum you must sell to keep the lights on.

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