In break-even analysis the contribution margin is defined as
A) sales minus variable costs.
B) sales minus fixed costs.
C) fixed costs minus variable costs.
D) None of the other answers are correct.

Question

Quizplus · Accepted Answer

The contribution margin is the amount leftover from sales revenue after variable costs have been subtracted. This leftover amount contributes towards covering fixed costs and ultimately, profits. Therefore, it is calculated as sales revenue minus variable costs. Choice A matches this definition, while choices B and C are incorrect interpretations of the contribution margin formula.

In Break-Even Analysis the Contribution Margin Is Defined as