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Contribution Margin
The amount by which sales revenue exceeds variable costs of production, used to cover fixed costs and generate profit.
Fixed Costs
Expenses that do not change with the level of output or sales in the short term, such as rent, salaries, and insurance.
Contribution Margin Ratio
A financial metric that measures the proportion of revenue that exceeds variable costs, indicating how much of sales revenue is available to cover fixed costs and generate profit.
Fixed Costs
Costs that remain constant regardless of the amount of output or the level of business operations, including expenses like rent, wages, and insurance fees.
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