Describe the relationship between contribution and profit
Relationship Between Contribution and Profit
[blur color=pink]The relationship between contribution and profit can be stated as:[/blur]
Profit = contribution – fixed cost
[blur]So that contribution = profit = fixed cost[/blur]
[blur color=green]This means that there are two ways of looking at contribution[/blur]
- Contribution = sales – variable cost
- Contribution = profit + fixed
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