In variable costing, revenue less all variable costs is
A) gross margin.
B) operating income.
C) contribution margin.
D) net income.

Question

Quizplus · Accepted Answer

In variable costing, revenue less all variable costs is called contribution margin. This is because contribution margin represents the amount each sale contributes to covering fixed costs and generating profit, and it does not include any fixed costs like overhead expenses. Gross margin includes all costs, both fixed and variable, related to producing a product or service. Operating income includes both fixed and variable costs and represents the profit earned from business operations after deducting operating expenses. Net income includes all costs and expenses, including taxes and interest expenses, and represents the overall profit or loss earned by an organization.

In Variable Costing, Revenue Less All Variable Costs Is