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As we’ve observed, this margin implies the ‘extent to which a income center earns an suitable contribution margin to cover its traceable fixed prices.
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Thus the accountability margin is considered a more practical longer-run evaluate of profitability in comparison to the contribution margin mainly because it takes into account adjustments in fixed costs traceable to a particular business enterprise Centre. Examples of these types of long-operate selections involve no matter whether to expandcurrent ability, to incorporate anew earnings center, or to do away with a gain Heart that is performing poorly.
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