Relationship Between Contribution and Profit

Relationship Between Contribution and Profit

18:02
Relationship Between Contribution and Profit

Relationship Between Contribution and Profit

The relationship between contribution and profit can be stated as:
Profit = contribution – fixed cost
So that contribution = profit = fixed cost

This means that there are two ways of looking at contribution
(i) Contribution = sales – variable cost
(ii) Contribution = profit + fixed cost.
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