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Direct Margin

Typcially used in construction accounting or manufacturing accounting, it is equal to the revenues less the actual direct cost of materials, land, subcontractors, payroll, and other direct construction/manufacturing costs. From the direct margin is subtracted the indirect costs to determine the gross margin.

Margins in Construction


I’ve been asked to identify the average margins in the construction industry.  Honestly, there is no such thing.   I tried and after several hours of research I couldn’t even get one of the types of contractors to have consistency in their [...]

Definition of Contribution Margin


Contribution margin is a core business concept and is often used in cost accounting to identify the amount of financial contribution a sold product provides to the company.  Simply put, contribution margin is the sales price less the direct costs [...]