Contribution Margin | Financial management

How Your “Most Profitable” Product Might Be Killing Your Business

Why choosing the product with the highest contribution margin can actually lower your total profit. A guide to optimizing product mix using the Theory of Constraints.

01.11.2025Absorption Costing, Bottleneck Management, Contribution Margin, Critical Thinking, Eliyahu Goldratt, Financial Planning, Managerial Accounting, Manufacturing Efficiency, Product Mix Optimization, Strategic Thinking, Theory of Constraints, Throughput Accounting, TOC, Variable Costing

Special Orders: Should You Accept a Price Below Production Cost?

Should you accept a special order below full cost? A real-world manufacturing case study analyzing relevant costs, contribution margin, and strategic risks.

08.06.2025Contribution Margin, Cost Analysis, Idle Capacity, Managerial Accounting, Manufacturing Finance, Pricing Strategy, Relevant Costs

Costing Traps (Part 3)

Is the highest margin product always the best? Discover why maximizing Contribution Margin can hurt profits. A Theory of Constraints guide to optimal Product Mix.

04.03.2018Bottleneck Management, Business Management, Contribution Margin, Eliyahu Goldratt, Financial analysis, Financial Planning, Managerial Accounting, Operational Expenses, Product Mix Optimization, Profit Maximization, Theory of Constraints, Throughput Accounting, Variable Costing