Question

Explain what is meant by “contribution analysis”. Carefully define the term and provide examples to illustrate it.

Answer 1

THURSDAY January 2nd Week. 009-357 09 01 6 what is contribution analysis ? A : - Contribution analysis is used in 10 estimating how direct and variable Casts of a product affect the net in care " of a company, Direct and vamaple - Costs incurnal during the manufacturing " Process are subtracted from aprenne - to arrive at contribution mangin. fon enample! 02 a company sells 10,000 shoes for total novenue of $500,000, with a 03 Cast of goodle solal of $250,000 and a shipping to labon expense of ** $200,000.0 0 The contribution mangin pen thee ist - ($500,000 - $250,000 - $200,000)/10,000 = $5.00 pen shoe.