The contribution margin of a department is the difference between

Question

Quizplus · Accepted Answer

The contribution margin is calculated by subtracting the variable costs (i.e. direct expenses) from the revenue generated by the department. Therefore, option D is the correct answer as it subtracts the direct expenses from the gross profit on sales. Option A is incorrect as it subtracts total expenses which include fixed expenses as well. Option B is incorrect as it subtracts the cost of goods sold instead of direct expenses. Option C is incorrect as it includes indirect expenses instead of direct expenses.

The Contribution Margin of a Department Is the Difference Between