Which one of the following descriptions of contribution is correct? Contribution =

Question

Quizplus · Accepted Answer

Contribution is calculated by subtracting the variable costs from the revenue. This is because variable costs are directly affected by the level of production or sales, while fixed costs (which are not included in the calculation of contribution) do not change with the level of production or sales. Therefore, the correct formula for contribution is Revenue - Variable Costs.

Which One of the Following Descriptions of Contribution Is Correct