Contribution margin is:
A) Sales less cost of goods sold.
B) Sales less variable production, variable selling, and variable administrative expenses.
C) Sales less variable production expense.
D) Sales less all variable and fixed expenses.

Question

Quizplus · Accepted Answer

Contribution margin is the amount of money available to cover fixed expenses and contribute to profits after variable expenses have been subtracted from sales. Therefore, the best choice is B which subtracts all variable expenses including variable production, variable selling and variable administrative expenses from sales to arrive at the contribution margin.

Contribution Margin Is