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COST VOLUME PROFIT ANALYSIS


            Contribution Ratio




            Contribution is expressed as a percentage of sales.





            Formula                      =              Sales – Variable costs


                                                        Sales





            Example:

            Selling price per unit                      =             R50


            Variable costs per unit =                                 R40





            Therefore contribution per unit = R50 – R40 = R10




            Contribution ratio = R10 / R50 = 20%




            For each R1 sale a contribution of 20c is earned.

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