Profit and Contribution

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dpw
dpw Registered Posts: 14 New contributor 🐸
in AAT Level 3 (Level 6 in Scotland)
What is the difference, in a nutshell, between profit and contribution?

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  • crispy
    crispy Registered Posts: 466 Dedicated contributor 🦉
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    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 Epic contributor 🐘
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    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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