YOGYAKARTA - What is the contribution margin? When you run a business or have a company, understanding how profitable the business is for you is of course very important. In general, business owners see the profit indicator of a business from the value of the Profit Margin.
Profit margin will basically measure the total amount of revenue from sales transactions after deducting the costs incurred.
However, before we determine the value of the profit margin, we should first learn the meaning and benefits of the Contribution Margin as a financial analysis tool.
Margin Contribution is the net revenue value after deducting variable costs. If we formulate it, it will be like this:
When you produce a product or provide a service and apply variable costs (packaging costs and shipping costs, for example), the remaining value is the Contribution Margin.
This is a different way of interpreting business profits. The implication is used to determine how far the sales revenue of a business will cover fixed costs after the variable cost element is removed.
English:
Margin contribution analysis is a method used to calculate the difference between revenue and variable costs. It is intended to assess the remaining margin available after variable costs are deducted, so that between the revenue generated from the various products or services of a company can be compared.
The benefits and functions of margin contribution analysis include several things:
For example, in one year, the manufacturing company PT Kilat printed a net income of Rp. 150,000,000. The details of PT kilat's variable costs are:
Thus, the total variable cost of PT Kilat is IDR 55,000,000. If it is included in the Contribution Margin formula, the result is as follows:
Contribution Margin of PT Kilat: Rp150,000,000 – Rp55,000,000 = Rp95,000,000
The value of the net opinion can be subtracted by fixed costs to determine whether the contribution margin is positive or negative.
Suppose PT Kilat's fixed costs in one year amount to Rp80,000,000. Then it can be said that PT Kilat is still making a profit of Rp15,000,000 (Rp95,000,000 - Rp80,000,000).
The implication is that PT kilat can still cover fixed costs after net income is reduced by variable costs incurred.
This calculation can be narrowed down to the Contribution Margin per unit. With the same formula, the calculation is as follows:
For example, if one product from PT Kilat costs Rp20,000 and the variable cost per unit is Rp6,000, then the value per unit is Rp20,000 - Rp6,000 = Rp14,000.
That's an overview of the contribution margin and how to calculate it. Hopefully useful. Visit VOI.id for other interesting information.
The English, Chinese, Japanese, Arabic, and French versions are automatically generated by the AI. So there may still be inaccuracies in translating, please always see Indonesian as our main language. (system supported by DigitalSiber.id)
