DMACC Accounting Contribution

Contribution Margin

For this week’s discussion, post 4–5 paragraphs discussing the meaning and importance to the business of the contribution margin. Consider as part of your post:

  • Is contribution margin part of financial accounting or managerial accounting, or both?
  • What kinds of costs, such as packaging, might be easy to forget when calculating production costs and contribution margin? Provide any examples that you may have witnessed in the past.
  • Discuss the risk to the company of miscalculating contribution margin.
  • Find or create an example of a contribution margin. If the contribution margin per unit increases, how does this affect the break-even point in terms of units sold?

The following article provides details about different aspects of packaging that may need to be considered as part of the accounting approach related to contribution margin:

  • Atagan, G., & Yükçü, S. (2013). Effect of packing cost on the sales price and contribution margin. Ege Academic Review, 13(1), 1–9.
  • For information on cost accounting and budgeting to prepare for this week’s activities, use the following resources:
    • Marshall, D., McManus, W., & Viele, D. (2020). Accounting: What the numbers mean (12th ed.). New York, NY: McGraw-Hill. Available in the courseroom via the VitalSource Bookshelf link.
      • The following chapters are most appropriate for this week:
        • Chapter 12, “Managerial Accounting and Cost-Volume-Profit Relationships.”
        • Chapter 14, “Cost Planning.”
    • Droms, W. G., & Wright, J. O. (2015). Finance and accounting for nonfinancial managers: All the basics you need to know. New York, NY: Basic Books.
      • The following chapter may be particularly useful:
        • Chapter 2, “The Tax Environment,” pages 22-31

        Estimating or Testing

        Discussion Resources

        The following resources will help you complete this discussion and may be useful in completing your second assignment:

        • Lind, D. A., Marchal, W. G., & Wathen, S. A. (2022). Basic statistics in business and economics (10th ed.). McGraw-Hill.
          • Chapter 4, “Describing Data: Displaying and Exploring Data.”
            • Instructions for creating dot plots (scatterplots), percentiles, and box plots will provide additional insight into how data is concentrated as well as the general shape of the data.
        • Thomas, R., & McSharry, P. (2015). Big data revolution: What farmers, doctors, and insurance agents can teach us about patterns in big data. Wiley.
          • Chapter 5, “Transforming Customer Relationships With Data.”
          • Chapter 6, “Intelligent Machines.”

        Instructions

        This week you read about different ways of exploring data in order to display and describe that data. If you were presented with an unfamiliar dataset, what are the first exploratory steps you would take to get familiar with the dataset and decide how to display the data?

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