A socio-ecological system consists of 'a bio-geo-physical' unit and its associated social actors and institutions.
Contribution Margin. Contribution margin is a productâs price minus all associated variable costs, resulting in the incremental profit earned for each unit sold. The total contribution margin generated by an entity represents the total earnings available to pay for fixed expenses and to generate a profit. The contribution margin concept is useful for deciding whether to allow a lower price in special pricing situations.
We use the contribution margin ratio to do this. Using the same example, variable expenses of $0.80 are 40% of sales of $2.00 per unit ($0.80/$2.00). To calculate breakeven in dollars, divide its fixed expenses by the contribution margin ratio of 60% ($60,000/.6 = $100,000).This means that the company has to make $100,000 in sales to breakeven. The contribution margin ratio is an important financial metric to calculate the profit potential for a business firm.If the dollar amount of sales increases by one dollar, in this example, the contribution margin increases by 60 cents.he contribution margin ratio is an important financial metric to calculate the profit potential for a business firm. If the dollar amount of sales increases by one dollar, in this example, the contribution margin increases by 60 cents.