Contribution Flashcards
1
Q
What is the equation for contribution ?
A
Contribution = sales rev - variable cost
2
Q
What is contribution ?
A
A business can calculate whether a product is contributing towards profit
3
Q
What are special orders ?
A
When a business is offered an additional order - contribution is used to make decisions
4
Q
What are some factors to consider when deciding on a special order ?
A
How many units will a business need in the future
What additional FC will be incurred ( machinery )
Have they got enough staff to handle new orders
Is it sustainable in the long term
5
Q
A
