# What is contribution in cost accounting?

**Contribution**is the amount of earnings remaining after all direct

**costs**have been subtracted from revenue. This remainder is the amount available to pay for any fixed

**costs**that a business incurs during a reporting period. Any excess of

**contribution**over fixed

**costs**equals the profit earned.

Subsequently, one may also ask, what is contribution and how is it calculated?

Definition: Total **Contribution** is the difference between Total Sales and Total Variable Costs. Formulae: **Contribution** = total sales less total variable costs. **Contribution** per unit = selling price per unit less variable costs per unit.

Subsequently, question is, what is the formula for contribution? **Contribution** margin per unit **formula** would be = (Selling price per unit – Variable cost per unit) = ($6 – $2) = $4 per unit. **Contribution** would be = ($4 * 50,000) = $200,000. **Contribution** ratio would be = **Contribution** / Sales = $200,000 / $300,000 = 2/3 = 66.67%.

Similarly, you may ask, what do you mean contribution?

When **you** make a **contribution**, it **means you**'re giving something away — whether it's your money, your possessions, or your time. A **contribution** can take many forms. Some **contributions** are measurable, like a $10 donation to the Salvation Army. Others are less tangible.

What is contribution in break even point?

The **contribution** margin is the sales price of a unit, minus the variable costs involved in the unit's production. Additionally, the **contribution** margin is used to determine the **break**-**even point**, which is the number of units produced or revenues generated to **break even**.