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.
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 [...]
I want to thank two readers for asking about this issue. While reading Using QuickBooks in Construction Accounting they noticed that I failed to explain how to transfer the costs of construction to the profit and loss statement. In effect, how [...]
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 [...]
Every construction project has costs beyond the direct costs and the contractor wants to earn a profit. To cover these costs he must have an appropriate markup. The contractor must give consideration to many variables and circumstances to [...]