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Suggested answer

Sales Cube Customer Contribution Margin vs Gross profit margin

Posted on by 135

I'm running a query against the Sales Cube to extract the sales order margin information.

I see that in the cube there are two different calculated measures:

Contribution Margin

Gross profit margin

What is the difference between the two measures?

I see that for some articles the contribution margin is equal to invoiced-COGS

while for other articles it is the gross profit margin that is equal to invoiced-COGS.

I'm a bit confused

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  • Suggested answer
    Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: Sales Cube Customer Contribution Margin vs Gross profit margin

    Hi Sjoe,

    If both differ then there must be a difference in your COGS and your variable costs associated with the product.

    Do you have e.g. an intercompany charge that you put on top of your cost price for intercompany invoicing or do you have a freight that is allocated, etc.?

    Can you have a look at your item master and the cost prices and their history and compare them with the costs that are taken for your IC transactions?

    Best regards,

    Ludwig

  • Sjoe Profile Picture
    Sjoe 135 on at
    RE: Sales Cube Customer Contribution Margin vs Gross profit margin

    Hello Ludwig,

    I had already the definition, though it is not clear to me what exactly goes into the contribution margin and what goes into the gross profit.

    In fact I have a company A that sells primarily intercompany where the two values are exactly the same, while company  B that purchases from A and sells to customers where the contribution margin is not always the same as the gross profit margin. I need to know why

  • Suggested answer
    Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: Sales Cube Customer Contribution Margin vs Gross profit margin

    Hi Sjoe,

    You can find the definition here:

    docs.microsoft.com/.../sales-cube-salescube-for-microsoft-dynamics-ax-2012-r2-and-r3

    Contribution margin (absolute):

    The amount remaining after unit variable costs has been deducted from the unit revenue.

    Contribution margin (percentage):

    The contribution margin divided by total revenue, expressed as a percentage

    Gross profit margin (absolute):

    The amount remaining after the cost of goods sold (COGS) has been deducted from the total sales for an item or a given quantity of inventory

    Gross profit margin (percentage):

    The gross profit margin divided by the total sales revenue, expressed as a percentage. The gross profit margin represents the percent of total sales revenue that a retailer retains after incurring the direct costs associated with producing the goods and services sold. The higher the percentage, the more the retailer retains on each dollar of sales to service its other costs and obligations.

    Best regards,

    Ludwig

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