For merchandising firms, contribution margin will always be a lesser amount than gross margin.

Name: For merchandising firms, contribution margin will always be a lesser amount than gross margin.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Contribution margin is calculated as sales revenue minus variable costs, while gross margin is calculated as sales revenue minus cost of goods sold. Cost of goods sold includes both variable and fixed costs, so contribution margin will always be a lesser amount than gross margin.

For Merchandising Firms, Contribution Margin Will Always Be a Lesser