Answer / mita rungta

Here's an example of a contribution format income statement:

Beta Sales Company Contribution Format Income Statement For Year Ended December 31, 201X

Sales $ 462,452
Less Variable Costs: $ 303,770
Contribution Margin (34%) $ 158,682
Less Fixed Costs: $ 96,101
Net Operating Income/ Net profit. $62,581

The Beta Company's contribution margin for the year was 34 percent. This means that, for every dollar of sales, after the costs that were directly related to the sales were subtracted, 34 cents remained to contribute toward paying for the indirect (fixed) costs and later for profit.

from this example you can understand the difference between contribution and net profit.

Answer / anonymous

Contribution is that part of income which first recover your
fixed cost and then starts generating profits.

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