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Both gross margin and contribution margin are valuable concepts for cost managers, but they communicate different information. Gross margin is the difference between revenues and cost of goods sold; in other words, gross margin is a measure of how much the company charges above the cost of its products. Gross margin shows how much money is available to cover non-manufacturing costs. Contribution margin, on the other hand, is the difference between revenues and all variable costs. This shows how much money is available to cover fixed costs. Fixed costs by definition cannot be altered in the short run, and contribution margin can be used to determine the minimum sales volume to cover these fixed costs. Contribution margin can be used to answer questions like: How much do we have to sell to break even? How much do we have to sell to cover this new fixed-cost investment? At what volume of sales will we make our target income? (Datar, S.M., & Rajan, M.V., 2018, p. 88). It seems to me that contribution margin is more significant for use in CVP than gross margin. Cost-Volume-Profit Analysis is about determining costs and profits at various levels of production; its focus is on the effect of variable costs on profitability. Contribution margin isolates variable costs from fixed costs, while gross margin mixes variable and fixed costs together in the form of Cost of Goods Sold. This in effect makes it more difficult to see the results of changes in variable costs due to volume