7.2 Contribution
　　Contribution is short for “contribution to fixed costs and profits. The idea is that after deducting the variable costs from sales, the figure remaining is the amount that contributions to fixed costs and once fixed costs are covered to profits.
　　● If total contribution exceeds fixed costs, a profit is made
　　● If total contribution exactly equals fixed costs, no profit or loss is made
　　● If total contribution is less than fixed costs, there will be a loss
　　Contribution = Sales – Variable cost
　　Example 2:
　　Variable cost = $6 per unit
　　Sales price = $10 per unit
　　No opening inventory
　　Production = 20000 units
　　Fixed cost = $45000
　　Required: calculate the contribution and profit, using marginal costing principle, if sales were as follows: 10,000 units; 20,000 units
　　10,000 units 15,000 units 20,000 units
　　$$$$$$
　　Sales　　　　　　　　 100000　　　　　　　　　　　 150000　　　　　 200000
　　Opening inventory 　　　0 　　　　　　　　　　　　0　　　　　　　　 0
　　Variable production cost 120,000　　　　　　　　 120,000　　　　 120,000
　　Less: value of closing 60,000=（20000-10000）　　　 30000 　　　　　　　0
　　Inventory （at marginal x $6/unitCosts）
　　Variable cost of sales 　         60,000 　　　　　　　　　90,000 　　　　120,000
　　Contribution　　　　　　 40,000 　　　　　　　　　60,000　　　　　80,000
　　Less: fixed cost　　　　    45,000　　　　　　　　　　45000　　　　　45,000
　　Profit （loss）　　　　             （5,000）　　　　　　　　 15,000　　　　　35,000
　　Profit（loss） per unit 　               （0.5）　　　　　　　　　 1　　　　　　　 1.75
　　Contribution per unit　　　    4 　　　　　　　　　　　4　　　　　　　　　4
　　Note:
　　● The profit per unit varies at differing level of sales, because the average fixed overheads cost per unit changes with the volume of output and sales
　　● The contribution per unit is constant at all level of output and sales
　　● The main advantage of contribution information （rather than profit information） I that it is easy to determine by management whether profits or loss will be made at certain sales levels. Therefore, contribution information is more useful for decision making.
　　Example 3：
　　A company sells a single product for $9. Its variable cost is $4. Fixed costs are currently $70000 per annum and annual sales are 20000 units. There is a proposal to make a change to the product design that would increase the selling price to $10 for the re-designed model with variable cost of $4.5. It is expected that annual sales at this higher price would be 19000 units.
　　How would the re-design of the product affect annual profit?
　　Solution:
　　$　　　　　　　　　　　　　　　　 $
　　Sales 20000 x $9　　　　　　　      180,000 19,000 x $10　　　　　　　　　 190,000
　　Variable cost 20000 x $4　　　　　　 80,000 　　　　 19,000 x $4.5　　         85,500
　　Contribution 　　　　　　　　　　　100,000　　　　　　　　　　　　　 104,500
　　Fixed costs　　　　　　　　　　   　70,000 　　　　　　　　　　　　　  70,000
　　Profit　　　　　　　　　　　　　  30,000 　　　　　　　　　 　　　　 34,500
　　Note:
　　Changes in the volume of sales, or in sales prices, or in variable costs will all affect profit by altering the total contribution. Marginal costing techniques can be used to help management to assess the likely effect on profits of higher or lower sales volume, or the likely consequences of reducing the sales price of a product in order to increase demand, and so on. The approach to any such analysis should be calculating the effect on total contribution.
　　通过ACCA考试实属不易，首先要有执着的精神，其次是不断勤奋的学习，高顿网校为大家提供ACCA题库免费做题，希望助大家一臂之力，查看详情》
ACCA网络课程课程专业名称讲师试听
85%的人正在学习该课程ACCA 全维度网课体验课程
实景课堂与独立录制
覆盖所有知识点，根据学习计划推进学习进度
高顿名师
70%的人正在学习该课程ACCA网课全科卡（8.2折）
为零基础刚开始学习ACCA的学员特别定制		高顿名师