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 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 […]
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 […]
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 […]