Contribution margin is:
A)Net sales
B)Revenues plus variable cost
C)Revenues minus variable cost
D)Revenues divided by fixed cost
E)None of these

Question

Quizplus · Accepted Answer

Contribution margin is the amount of revenue that remains after deducting variable costs. Therefore, C, which represents revenues minus variable costs, is the correct choice. A (net sales) is the total amount of revenue generated by sales, but does not take into account the costs incurred in generating those sales. B (revenues plus variable costs) would result in a higher number than the contribution margin, as it includes all of the revenue generated without subtracting any costs. D (revenues divided by fixed cost) is not a valid calculation for contribution margin. E (none of these) is not the correct choice because C accurately represents contribution margin.

Contribution Margin Is