THE CONTRIBUTION MARGIN APPROACH TO INCOME

The Contribution Margin Approach to Income

The Contribution Margin Approach to Income

Wal-Mart Contribution Margin Approach

Where there are multiple product lines, contribution margin analysis would indicate which product line produces/contributes the most money toward fixed costs and making a profit, hence which product to push (as in sales) (Ajinkya, 2006).

It also might identify situations where a price for a particular product might be too low.

Since many of the functions an operational manager of Wal-Mart performs depends on a firm understanding of costs, taking a contribution margin approach when reporting profitability focuses the user directly on fixed ...