The contribution margin is calculated as
A)Sales revenue less cost of goods sold.
B)Sales revenue less discretionary costs.
C)Sales revenue less committed costs.
D)Sales revenue less total variable costs.

Question

Quizplus · Accepted Answer

The contribution margin is calculated as the sales revenue less total variable costs. This is because the contribution margin represents the amount of revenue that is available to cover fixed costs and contribute to profits after variable costs have been paid. Choice A is incorrect because it only subtracts the cost of goods sold, not all variable costs. Choices B and C are incorrect because they refer to specific types of costs (discretionary and committed) and do not capture all variable costs.

The Contribution Margin Is Calculated as