The contribution margin per unit is equal to the:
A) sales price per unit minus the total costs per unit.
B) variable cost per unit minus the fixed cost per unit.
C) sales price per unit minus the variable cost per unit.
D) pretax profit per unit.
E) aftertax profit per unit.

Question

Quizplus · Accepted Answer

The contribution margin per unit is the amount of revenue that remains after deducting variable costs from the sales price per unit. Therefore, it is equal to the sales price per unit minus the variable cost per unit. Choice A is incorrect because it deducts total costs instead of just variable costs. Choice B deducts both fixed and variable costs, which is not the definition of contribution margin. Choices D and E are incorrect because they refer to profits, which are the result of deducting both variable and fixed costs from revenue.

The Contribution Margin Per Unit Is Equal to The