For every unit sold, both contribution margin and profit increase at the same rate, by an amount equal to the unit contribution margin.

Question

Quizplus · Accepted Answer

This statement is true. Contribution margin is the amount of revenue left over after deducting only variable costs, and unit contribution margin is the amount of contribution margin per unit sold. Therefore, for every unit sold, both contribution margin and profit increase by the unit contribution margin.

For Every Unit Sold, Both Contribution Margin and Profit Increase