A business segment or department that has a positive contribution margin contributes to increasing the net income of the business.

Question

Quizplus · Accepted Answer

A positive contribution margin means that the revenue generated by the segment or department covers its variable costs, and some of the fixed costs, resulting in a profit for the business. Therefore, the net income of the business increases when a department has a positive contribution margin.

A Business Segment or Department That Has a Positive Contribution