Why Is Contribution Margin Important? Give an Example

question 11

Essay

Why is contribution margin important? Give an example.

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Definitions:

Theoretical Foundation

The fundamental principles and assumptions that form the basis for a particular theory or field of study.

ERG Theory

A theory proposed by Clayton Alderfer that categorizes human needs into three groups: Existence, Relatedness, and Growth, modifying Maslow's hierarchy of needs.

Maslow's Needs

A theory of psychological development outlined by Abraham Maslow that proposes a hierarchy of human needs, from basic physiological needs to self-actualization.

Human Motivation

The internal drive that propels individuals to take action, achieve goals, and satisfy needs and desires.