Contribution margin can be calculated in a lot of different ways and can certainly be used in many different ways. When we break it down to basics, however, it's a simple concept. Our goal in looking at the contribution margin is just as it sounds: after paying for the direct costs, how much of our profit is left over to CONTRIBUTE to paying fixed costs and earning a profit?!!? 

 

1. If you were a manager, how might you use the contribution margin figure or % to help you in your daily decision-making process?