Profit and Contribution

dpw
dpw Registered Posts: 14 Regular contributor ⭐ ? ⭐
What is the difference, in a nutshell, between profit and contribution?

Comments

  • crispy
    crispy Registered Posts: 465 Dedicated contributor ? ? ?
    Profit (as in Net Profit) = All company's income less all expenses

    Contribution = Sales less Variable expenses only

    Contribution is a useful figure when determing break-even points/target profits etc.
  • sdv
    sdv Registered Posts: 585
    dpw wrote: »
    What is the difference, in a nutshell, between profit and contribution?

    Profit is included in the Contribution

    Contribution less Fixed Costs equals Profit

    Sales minus Variable Costs = Contribution
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